TRIS Rating affirms the company rating and senior debentures. The current unsecured series of Banpu Public Company Limited (BANPU) is rated “A+” with a “stable” outlook. New unsecured collateral in the amount of not more than 6 billion baht and the Company’s greenshoe reserve in the amount of not more than 4 billion baht at the level of “A+” as well. This time, it will be used to repay the company’s loan. and used as working capital in the business
The rating continues to reflect the company’s leadership in the coal industry in the Asia-Pacific region. as well as having a stable income from the power generation business and adjusting the strategy to become the company’s fully integrated clean energy producer meanwhile The rating also reflects long-term volatility in coal prices and a slowdown in coal demand, partly driven by countries’ efforts to reduce air pollution around the world.
In the first three months of 2022, the company performed better than TRIS Rating’s estimate due to sharp increases in coal and natural gas prices. The company posted earnings before interest, tax, depreciation and amortization (EBITDA) of $433 million, an increase of 63% year-on-year. Its debt to EBITDA ratio improved to 3.6x (adjusted to a full-year ratio with the past 12 months) from 4.5x at the end of 2021. Stronger-than-expected performance. In addition, it received money from the sale of investment in Sunseap Group Pte. Ltd. (Sunseap) amounting to USD 347.5 million. It should help support the company’s capital structure.
In early July 2022, the company completed a US$750 million acquisition of natural gas field assets. and has invested $150 million in healthcare funds in the United States. The new natural gas assets are expected to generate immediate EBITDA of approximately $150-180 million per year.
As of March 2022, the company’s total debt was approximately $6.1 billion. The debt in the first order of repayment consists of the subsidiary’s debt, which is a secured debt of USD 439 million. and unsubordinated debt $770 million unsecured Meanwhile, the company’s prioritized debt to total debt ratio stood at regarding 20.1% at the end of March 2022.
The “stable” outlook reflects TRIS Rating’s expectation that the company will maintain its leadership in the coal industry. Dividend income from the stable power business and higher profit from the natural gas business will help mitigate some of the impact from the volatility of the coal industry. Meanwhile, good financial liquidity from financial discipline and careful cash management will help the company survive the volatile industry.
Factors that might cause a change in credit rating The rating might be revised up if the company’s financial profile improves significantly or has more stable cash flow. on the contrary The rating might be downgraded if the company’s operating performance is significantly weaker than TRIS Rating’s estimate. This might happen if coal and natural gas prices dropped significantly from expected levels. In addition, debt-funded investments further affected the capital structure and cash flows for debt repayment. The company’s significant and ongoing weakness would be another factor that might lead to a rating downgrade.
By InfoQuest News Agency (01 Aug. 65)
Tags: BANPU, TRIS Rating, debenture
