Shares of Banpu Plc continued to drop yesterday as investors considered the impact of a 31.5-billion-baht judgement against the company last week by the Civil Court.
Mr Chanin declined to answer questions about the court ruling against Banpu during a seminar on Asean investment yesterday. Banpu shares fell by3%, dragging down the broader Stock Exchange of Thailand index. KOSOL NAKACHOL
Chief executive Chanin Vongkusolkit declined to answer questions about the case in his first public appearance in Bangkok since last Thursday's ruling.
He said the company expects 2012 revenue will rise by 3% from last year, but profits will fall due to declines in coal prices amid the global economic slowdown. Banpu posted a first-half profit of 5.5 billion baht on revenue of 62.3 billion and a 2011 profit of 20 billion on revenue of 127 billion.
Shares of Banpu on the SET closed yesterday at 392 baht, down 12 baht or 3% in heavy trade worth 2.29 billion baht. The fall helped drag the broader SET index down by 0.2% to close at 1,284.3 points.
The decline follows a 38-baht drop last Friday and has helped push the stock to a year-low. Over the past month, Banpu shares have fallen by 12.2% and are down by more than 35% over the past 12 months compared with a one-month gain of 4.4% and a 12-month rise of nearly 25% for the SET index.
Last Thursday, the Civil Court ordered Banpu, one of Asia's largest coal producers, to pay more than 31 billion baht in damages to Siva Nganthavee for "deception" in its partnership to develop a coal mining and power project in Hongsa, Laos.
Banpu has vowed to appeal the verdict and insists the Hongsa project will not be affected by the court ruling.
Mr Siva's Thai-Lao Lignite Co was granted a concession by the Lao government to develop the Hongsa project in 1994, and in 2005 it brought Banpu in as a partner. In September 2006, Laos notified Thai-Lao Lignite it was scrapping the contract, and two months later it awarded a new concession to Banpu.
Mr Siva argued Banpu used information gained from their partnership to "misinform" the Lao government, leading to the termination of the contract. Mr Siva, who sought damages of 63.5 billion baht from Banpu based on lost earnings, plans to appeal the judgement to seek higher compensation.
It could be years before the final outcome of the case is known.
Thanathep Chantharakarn, an analyst at Bualuang Securities, said the Civil Court lasted five years before a verdict was reached.
"The ultimate victor could be the party with the most patience," he said.
Mr Thanathep said Banpu will likely have to set aside reserves to cover the 4-billion-baht damage award or 5.74 billion once interest is included, equal to an earnings hit of 21 baht a share for this year alone.
"Banpu has not given any information to analysts, understandable perhaps given the amount at stake," he said.
The court also ordered Banpu to pay Mr Siva compensation of 860 million baht a year from 2015-27 and 1.38 billion from 2028-39.
Bualuang estimates in the worst-case scenario for Banpu, earnings from the Hongsa project could be cut 30% to cover the compensation payments to Mr Siva. Banpu subsidiary Banpu Power holds a 40% stake in the 1,800-megawatt coal-fired power project, with another 40% held by Ratchaburi Electricity Generating Holding and 20% by Laos.
Banpu earnings, previously estimated at 9.96 billion baht this year, could be cut to 4.13 billion after reserves are set aside for the court ruling. Bualuang cut its share price target for the company to 504 baht from 540 earlier.
Tris Rating announced it is maintaining its AA rating for Banpu but will monitor the financial effect of the case on the firm.