Cement unit expects improvement if court approves debt buyback

Foreign exchange will no longer have a significant impact on the earnings of TPI Polene Plc, as occurred in the second quarter of this year, if the Central Bankruptcy Court approves the company’s plan to buy back US$220m in debt in September, according to Prachai Leophairatana.

Mr Prachai, who founded Thai Petrochemical Industry, is overseeing the business rehabilitation of TPI Polene, its cement subsidiary.

TPI Polene posted disappointing second-quarter earnings with a net profit of THB701m, down 46 per cent from the previous quarter, but up 44 per cent from the same period of last year. Mr Prachai said yesterday that the decline was mainly due to a foreign-exchange loss of THB755m compared with a forex gain of 275m in the first quarter.

Once the company finishes its debt repurchase programme, the effect of foreign exchange fluctuations would be minimised, he said.

The court recently decided to end arbitration between TPI Polene and its creditors. The company will hold talks with the creditors by itself over the debt restructuring proposal, which includes a full repayment of secured debt, a 10 percent reduction in unsecured debts, and a waiver of the remaining accrued interest and fees. The court is scheduled to rule on the proposal in September.

Mr Prachai said he hoped that the court’s ruling would compel creditors to sell the additional debts worth US$80m to the company.

He also insisted that TPI Polene would not adjust its projected earnings before interest, tax, depreciation and amortisation (EBITDA) of 7.5 billion baht this year, up 20 percent from 2003.