Published on January 13, 2006

The Stock Exchange of Thailand has asked International Engineering Plc (IEC) to clarify the company’s purchase of a 49-per cent stake in Application Hosting Service (A-Host).

The stock exchange told IEC to provide more details about A-Host and explain the company’s relationship with it.

The authority also requested the book value per share of A-Host as of September 30, 2005, and a summary of A-Host’s financial projections for 2006 through 2010 as well as the source of the cash IEC expects to derive from A-Host during this period.

The SET asked IEC to provide the information early yesterday, but further clarification was unavailable yesterday evening.

IEC early yesterday reported that its board of directors had resolved that the company or a subsidiary would buy 53,900 shares in A-Host at a price of Bt1,700 per share from Metro Systems Corp Plc (MSC). The payment is expected to be made this quarter.

Based on A-Host’s September 30, 2005 financial statement, 49 per cent of the net tangible assets of A-Host acquired by IEC would be worth Bt25.41 million.

“IEC determined the value of A-Host by using the discounted cash flow approach,” the company said.

“This method reflects the future earnings potential based on the financial projections from 2006 to 2010 using 2005 as the base year.

“IEC will use the funds from a private placement on December 27, 2005 [to buy the shares].”

IEC recently sold 36.04 million of its 784.55 million shares to Nezu Asia Ltd and Nopporn Thepsithar at a price of Bt5.55 each – well below the stock’s closing price yesterday at Bt7.30.

Nopporn is Siam Cement Plc (SCC)’s senior vice president for logistics and exports.

The company raised Bt1.12 billion during its share sale.

Proceeds from the remaining 613 million shares will be used to finance its business expansion plan. The shares may be sold to specific investors or swapped with other companies, said IEC’s acting president, Surayuth Kauphanichanon, said.

He said that the company is conducting a feasibility study to broaden its business into logistics and energy industries. The study will look into how to invest in these businesses, he said.

“The company is in negotiations with four or five potential partners and a conclusion is expected at the end of February. After the deal, the company’s business structure will be clearer,” Sarayuth said.

The chairman of the company’s executive committee Sumit Champrasit said the company has targeted sales of Bt6.2 billion this year, up from Bt5.2 billion last year.

IEC also wants to enter the information and communications business, in addition to its existing businesses of engineering, mobile-phone handset distribution and after-sales service and providing airtime, he said.

He said the company would turn around this year and resume dividend payments.

Siriporn Chanjindamanee

The Nation

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