TPIPL changes strategy, seeks guarantee for bonds

TPIPL changes strategy, seeks guarantee for bonds
Published: 26 March 2004

TPI Polene Plc (TPIPL), the country’s third largest cement producer, said yesterday it plans to ask Krung Thai Bank Plc to be the guarantor for its planned issuance of bonds, a shift from its previous strategy to secure loans from the bank.  Chief executive officer Prachai Leophairatana said TPIPL was still hoping to get a loan from KTB, but is now contemplating selling bonds in the hope KTB will guarantee them.  Under an initial plan worked out by TPIPL’s management and KTB, the bank was expected to lend up to $750 million to the cement maker to refinance its debts owed to various creditors. However, there were various preconditions attached to the loan agreement.

Prachai, who in January successfully raised about 11 billion baht in new equity, said his company has managed to lower TPIPL’s debts by using cash raised from its operations. It will likely use the proceeds from the equity sales to lessen its debts as well.  He added TPIPL’s balance sheet improved after the company’s recent capital raising and debt payments.  In any case, he added that if KTB does not want to underwrite these bonds, other financial institutions have already expressed interest, especially now that the company’s balance sheet has improved.  Prachai said Tris Rating has indicated that TPIPL’s rating will likely be upgraded to BBB within a few months.  Prachai also said that TPIPL, which has benefited from the economic boom and higher demand for cement, has sufficient cash to pay debts at present even if it cannot find loans to refinance them.

The company projects that its income for 2004 will expand by at least 15 percent from last year’s income of 19 billion baht on the back of higher prices for cement and plastic pellets.  The higher domestic price of cement has prompted TPIPL to adjust its marketing plan to focus more on the local market rather than on exports.  Local and overseas sales of cement account for 80 and 20 percent, respectively, of income, he said, adding TPIPL currently produces nine million tonnes of cement a year, matching its full production capacity.