TRIS Rating Affirms Company & Issue Ratings and Assigns New Issue Rating of “GLOW” at “A/Stable”

TRIS Rating Co., Ltd. has affirmed the company rating and the ratings of Glow Energy PLC’s (GLOW) existing guaranteed debentures at “A”. At the same time, TRIS Rating has assigned the rating of “A’’ to GLOW’s proposed issue of up to Bt9,000 million in guaranteed debentures. The outlook remains “stable”. The ratings reflect GLOW’s proven track record in the electricity generation in Thailand, reliable cash flow from long-term Power Purchase Agreements (PPA) with the Electricity Generating Authority of Thailand (EGAT), and long-term contracts with a diverse group of industrial customers (IC). These strengths are partially offset by customer concentration risk as most of GLOW’s customers are in the petrochemical industry in the Map Ta Phut (MTP) area. In this area, many industrial projects are facing regulatory risks as the projects may not conform to the 2007 Constitution regarding investment approval procedures for potentially harmful projects. The “stable” outlook reflects an expectation that GLOW will receive reliable cash flow from its long-term power sales contracts with EGAT and ICs. The revival in utility demand following the economic recovery will increase the electricity demand of existing customers and will enable GLOW to weather the negative impact from delays in the expansion projects. TRIS Rating reported that GLOW was established in 1993 as a Small Power Producer (SPP) in the Map Ta Phut Industrial Estate (MIE). Its business scope has expanded into the cogeneration and independent power producer (IPP) both in Thailand and neighboring countries. GDF SUEZ Group holds 69% of GLOW’s shares. GDF SUEZ is one of the world’s leading energy providers, supplying energy in Europe and throughout the world. GDF Suez also operates gas transmission and distribution networks and other energy services. Currently, GLOW is the leading private power producer in Thailand. The cogeneration business generated about 65% of GLOW’s sales and earnings before interest, tax, depreciation and amortization (EBITDA). As of December 2009, its power generating capacity totaled 1,860 megawatt (MW), consisting of 865 MW in IPP projects and 995 MW in cogeneration units. One IPP gas fired plant is located in Chonburi province while a hydro power plant is located in Lao PDR. GLOW’s cogeneration business, which is located in MIE and Eastern Seaboard Industrial Estate (ESIE) in Rayong province, mainly caters to petrochemical plants which require highly stable supplies of utilities. GLOW’s cogeneration facilities comprise 21 electrical generators that have been interconnected to provide ICs with reliable supplies of electricity and steam. With the interconnections, all units back each other up in order to ensure stable and reliable availability. However, this structure carries concentration risk because most of the customers are in the petrochemical industry and located in the MTP area. The petrochemical industry is volatile and fairly sensitive to economic cycles. Out of a total 1,860 MW of electricity and 967 tonnes per hour of steam, 1,429 MW has been contracted to EGAT under several PPAs spanning 21 to 25 years. The remaining electricity and steam, together with treated water, are supplied under sales contracts. The contracts have remaining terms of up to 20 years. These long-term commitments provide GLOW with reliable sources of cash flow. In 2009, electricity sales accounted for 86% of GLOW’s total sales, with EGAT and ICs contributing 70% and 30% of electricity sales, respectively. TRIS Rating said, GLOW’s plant performance was considered satisfactory in 2009. In the cogeneration business, electricity demand from ICs has fallen sharply since the fourth quarter of 2008 because of the global financial crisis. However, demand has gradually recovered since the second quarter of 2009, offsetting a drop in the beginning of the year. In the fourth quarter, the power sales to ICs climbed to 297 MWh per month, compared with the pre-crisis level of 283 MWh per month. This recovery drove total year power sales to IC to 3,404 GWh or a 6.6% year-on-year (y-o-y) increase. GLOW’s operating margin moderately improved to 22.1% in 2009 from 21.4% in 2008 because fuel price increased slower than the power tariff. EBITDA for 2009 was Bt7,802 million, slightly better than Bt7,330 million in 2008. GLOW’s total debt to capitalization ratio increased to 59.8% from 52.3% in 2008, due to higher borrowing to fund its expansion projects. Currently, GLOW is developing three expansion projects: CFB#3 (115 MW), Phase 5 (382 MW equivalent) and a new IPP (660 MW). The new IPP is operated by GHECO-One Co., Ltd., a 65:35 joint venture between GLOW and Hemaraj Development PLC. Construction of the new projects has progressed as planned except for the CFB#3. This project was about six months behind schedule due to the contractor delay. The investment cost of the projects totaled Bt64,076 million. GLOW will require Bt34,000 million of funding during 2008-2011. All expansion will raise GLOW’s electricity generating capacity by 1,157 MW equivalent. The total capacity across the GLOW Group will then rise by 60% to 3,017 MW equivalent by the end of 2011. The court decision to suspend 76 industrial projects in the MTP area has increased concern over the regulatory risks of doing business in Thailand. GLOW’s expansion projects are currently not on the list of suspended projects and the construction proceeds as planned. The new IPP project under the operation of GHECO One is well protected under the PPA contracts with EGAT. The CFB#3 project has already received its operating license. GLOW is preparing to conduct Health Impact Assessment (HIA) studies for all expansion projects to comply with the regulation in the 2007 Constitution. Out of the new electricity generating capacity of 1,157 MW equivalent, approximately 200 MW will be sold to projects under suspension; 70 MW remains unsold. An anticipated one year delay in the expansion projects might limit the company’s growth potential but will have minimal impact on its ability to service its obligations, said TRIS Rating. Glow Energy PLC (GLOW) Company Rating: Affirmed at AIssue Ratings:GLOW10DA: Bt3,490 million guaranteed debentures due 2010 Affirmed at A GLOW156A: Bt1,500 million guaranteed debentures due 2015 Affirmed at A GLOW175A: Bt2,000 million guaranteed debentures due 2017 Affirmed at A GLOW186A: Bt2,500 million guaranteed debentures due 2018 Affirmed at A Up to Bt9,000 million guaranteed debentures due 2012-2019 A Rating Outlook: Stable

• ข่าวGlow Energy
• ข่าวthe company
• ข่าวo:eco
• ข่าวo:fin
• ข่าวen