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Bridge Loan

CP All may halt bond issues after acquiring bridge loan

CP All, the operator of 7-Eleven convenience stores, might stop issuing debentures after the third tranche of Bt40 billion this month as its humongous short-term debt has been converted into a long-term loan.

The retailer had incurred a Bt180-billion bridge loan to acquire cash-and-carry chain Siam Makro early last year, which it started refinancing through debentures. The first tranche of Bt50 billion was launched in October and the second of Bt40 billion in March.

Subscriptions will be opened from August 18-21 with a minimum purchase of Bt100,000.

Krungthai Bank, Siam Commercial Bank, HSBC and Standard Chartered Bank (Thai) are the joint lead arrangers for the institutional portion and KTB, SCB, SCBT, Bangkok Bank, Bank of Ayudhya, Thanachart Bank and Phatra Securities for the retail portion.

Executive chairman Korsak Chairasmisak said yesterday that CP All was wondering whether to issue additional debentures because the remaining debt of Bt50 billion has been converted into a long-term loan already at an acceptable interest rate amid the low-rate environment in the country.

The previous tranches offered coupon rates of about 5 per cent, while the rate for the next tranche has not been finalised yet.

Kriengchai Boonpoapichart, head of finance and investor relations, said the rate might be lower than 5 per cent.

Korsak said the debt of Bt50 billion was 10 per cent denominated in US dollars.

The plan to sell shares in Siam Makro still is under consideration.

CP All has said it plans to reduce its stake in Siam Makro to increase the unit's free float and reduce its debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio, which is at eight times.

Kriengchai said the company still aimed to increase sales by 10 per cent and expand its 7-Elevens by 600 and Makros by seven this year, mostly in Greater Bangkok and upcountry, with a budget of Bt8 billion to Bt9 billion.

CP All's first-quarter net profit took a hit from the financing expenses from buying Siam Makro.

"Profit from CP All alone in the first quarter was higher than last year but overall profit in the first quarter dropped because we had Siam Makro, unlike last year when we didn't have Siam Makro," he said.

Siam Makro has a low margin but also lower costs, while CP All has a high margin with high costs, so the actual gross profit margin should be seen in the second half of this year. It will better than last year's 22.6 per cent, Kriengchai said.


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