Italian-Thai Development subsidiary to raise

Corporate May 02, 2014 00:00

By Somluck Srimalee
The Nation

4,810 Viewed

Italian-Thai Development wants its subsidiary Asia Pacific Potash Corporation to raise capital on the Singapore or Hong Kong stock market this year to fund operation of a plant in Udon Thani province, company president Premchai Karnasuta said.

He said the project had received Environmental Impact Statement and Environmental Assessment (EISEA) certification and would start the public-hearing process midyear. Then the company will start producing potash for the market by the last quarter of the year. To facilitate this, it plans to raise funds from the capital market in Singapore or Hong Kong. It is studying this plan and will appoint a financial adviser in the second half.

The potash mine is expected to produce about 630 million tonnes over the 30-year life of the project and generate high income for the company over that period.

Meanwhile, ITD plans to issue a debenture worth Bt5 billion in the second half to be used for investment and to service some of its existing debentures that will expire this year.

The company’s senior deputy chief executive office for finance, Chartchai Chutima, said it had set aside an investment budget worth Bt1 billion this year. Some of that will come from the company’s cash flow and the rest will from the debenture that will launch in the second half.

After the debenture is issued, the company will maintain its debt-to-equity ratio at less than 3:1, including interest costs, he said.

Italian-Thai will bid on jobs in the first phase of the Dawei project in Myanmar in July. If its joint venture with Rojana Industrial Park wins the tender, the project will start construction at the end of this year. The company has enough cash flow to invest in this industrial-estate project, whose estimated value is about US$2 billion (Bt65 billion) for the first phase.

"We are the first-priority firm to get the rights to join the bid because we previously had the concession for this project. When it was turned over to the governments of Thailand and Myanmar, we retained the right to bid on the project, which has been separated into several phases," he said.

He added that the company was in the process of calculating how much it had already invested in some infrastructure in Dawei. The basic cost was about Bt6.7 billion, but it has to add in financing costs such as interest. The total amount will be proposed to the special purpose vehicle (SPV) that is majority-held by the Thai and Myanmar governments to pay back to ITD.

Chartchai said the reimbursement could either be cash or shares in the SPV if the company wins the bid.

As for ITD’s investment in a deep-sea port and rail system in Mozambique worth $4 billion, it is in the design phase and will start construction in this year. To fund this, the company is applying for loans from commercial banks in China, he said.

He added that a Chinese partner was investing in ITD’s bauxite-mining project in Laos.

Chartchai said all of the new investments in Dawei and the company’s mining businesses had sufficient funding sources to support its business expansion. They also are long-term investment projects that do not need more funding at this time.

At present up to 80 per cent of its revenue is from construction business, 60.65 per cent of which is for government projects, and the rest for the private sector. Up to 75.83 per cent is from domestic projects, and the rest from overseas, especially India.

Last year, the company recorded revenue of Bt43.91 billion, down 4 per cent from 2012, and net profit of Bt992 million.