SET-listed Ch. Karnchang Plc (CK) is divesting some of its stake in subway operator Bangkok Metro Plc (BMCL) for nearly 1.7 billion baht, giving it a 1-billion-baht profit to be used in repaying debt and serving future investments.
Its board on Wednesday approved selling 785 million ordinary BMCL shares to the company's unrelated legal entities for 1.65 baht apiece or nearly 1.3 billion baht and another 240 million BMCL shares to Bang Pa-in Land Development Co at the same price or 396 million baht, Plew Trivisvavet, chief executive of Thailand's largest contractor by market value, said in a filing to the SET yesterday.
The transaction volume represents 2.39% of the value of net tangible assets under CK's consolidated financial statements as of March 31. It will see CK's share in BMCL drop to about 25% from 30.19%.
The disposition of the shares in BMCL will enhance CK's liquidity, said Mr Plew.
Vorapote Uchupaiboonvong, executive vice-president for accounting and finance, said CK would gain roughly 1 billion baht in profit from the share sale.
"Our debt-to-equity ratio will decrease, and we'll have more money for dividend payments," he told the Bangkok Post.
The share price of 1.65 baht is the stock's average closing price for the 10 business days prior to the board meeting.
The transaction will be made within 15 days of the day of board approval, CK's statement said.
Last year BMCL posted a net loss of 774 million baht compared with 981 million in 2012. This year's first-quarter loss was 73.7 million baht.
The company has been granted a 25-year concession from the Mass Rapid Transit Authority of Thailand, with exclusive rights to operate train service, collect fare revenue and implement commercial development from mid-2004.
The subway runs a distance of 20 kilometres, has 18 stations and 11 park-and ride facilities and connects with the skytrain, Airport Rail Link and train services of the State Railway of Thailand.
CK shares closed yesterday on the SET at 25 baht, down 1.50 baht, in heavy trade worth 2.77 billion baht.