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FITCH THAILAND ASSIGNS EXPECTED NATIONAL RATINGS TO PROPERTY PERFECT'S SECURED BONDS

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Bangkok--May 31--Fitch Ratings (Thailand)

Fitch Ratings (Thailand) Limited today assigned expected 'BBB(tha)' Long-term National ratings to three tranches of secured debentures to be issued by Property Perfect Public Company Limited ("PF"). The 1.5-year tranche of up to THB450 million, 2.0-year tranche of up to THB750m and 2.5-year tranche of up to THB350m, mature December 2005, June 2006 and December 2006, respectively. The Outlook is Stable. The proceeds from the debentures will be primarily used for working capital and to prepay short-term debt.

The expected ratings reflect PF's creditworthiness, which is enhanced by mortgages over land, although the security enforcement framework is weak in Thailand. The THB450m and THB750m debentures will be secured by c.347 rais (555,200m2) of three lots of freehold land value at THB1.844 billion which equates to a value-to-loan ratio ("VLR") of 154% (i.e. an LVR of 65%), while the THB350m debentures will be secured by c.122 rais (195,200m2) of a freehold land valued at THB549.8m which equates to VLR of 157% (i.e. an LVR of 64%). The key financial covenants include a minimum collateral VLR of 150%, maximum total liabilities to equity of 175% and maximum dividend payout ratio of 50%.

Fitch says PF's creditworthiness is based on the improvement in its earnings performance and financial leverage, but takes into account the company's recent rehabilitation. PF's financial position has strengthened after its debt restructuring in 2001 due to debt forgiveness, a debt-equity swap and gradually improving operating performance. In 2003, PF reported a doubling of net sales and EBITDA to THB3.8bn and THB856mn, respectively. PF's net debt had declined to THB3.8bn at end-2003, equal to 4.4x of 2003 EBITDA. However, the company reported a deterioration in earnings performance in 1Q04. Due to the slower single-detached house ("SDH") sales mainly as a result of the acceleration of SDH transfers in 4Q03 before the government's homebuyer incentives ended, PF's net sales decreased 26% yoy to THB464.5 million in 1Q04. Its EBITDA also fell to THB53 million in 1Q04 from THB158 million in 1Q03, due to falling sales and rising selling and administrative expenses. The increased working capital to fund additional pre-built projects and land acquisition resulted in an increase in its net debt to THB5.2 billion at end-1Q04. As a result, its net debt to last-12-month EBITDA ratio weakened to 6.9x at end-1Q04, while its EBITDA to interest (including capitalised interest) ratio declined to 1.2x (1Q03: 6.1x). While the weak 1Q04 performance is a concern, based on the company's full-year projections, PF's overall financial position should strengthen by year-end.       According to PF, a significant improvement in sales and earnings is expected in 2H04 as all seven new projects for 2004 are launched.

The principal operational risks include rising interest rates, a slowdown in inventory turnover, construction delays, increasing material and land costs and liquidity management. PF's financial leverage remains relatively high, reflecting a reliance on project loans to provide a cushion against the unmatched timing of operating cash flows for each project. Most of PF's debt is secured. PF's operating cash flow will remain weak for 2004 due to its rapid growth. Nonetheless, over THB1.1bn of PF's committed banking facilities remained undrawn at end-1Q04, providing some funding flexibility.

Established in 1985, PF has developed into one of Thailand's major property developers, focusing on large-scale SDH developments in the Bangkok suburbs. Following the collapse of Thailand's property market in 1996/7, PF faced financial difficulties that resulted in its debt default in 1998. PF underwent a debt restructuring in 2001 and completed its rehabilitation plan in April 2004. As a result of the debt-equity swap, PF's creditors now hold about 90% of the company's stock. Listed on the Stock Exchange of Thailand in 1992, PF had a market cap of THB5.5 billion at end-April 2004.

A full rating report on Property Perfect Plc. is available on the agency's web site, www.fitchratings.com. Final ratings are contingent on receipt of final documents conforming to information previously received by Fitch, namely security registration.

Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with sub- or low-investment grade international sovereign ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk.   National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tha)' for National ratings in Thailand.   Specific letter grades are not therefore internationally comparable.

CONTACTS:
Wasant Polcharoen, Bangkok, Tel: +662 655 4763;
Lertchai Kochareonrattanakul, Bangkok, Tel: +662 655 4760;
Vincent Milton, Bangkok, Tel: +662 655 4759   End.
-NT-

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