TRIS Rating has placed the “BBB-” company rating of Prinsiri PLC (PRIN) on CreditAlert, with a “developing” implication. The rating action follows the company’s announcement on 1 July 2015 that PRIN’s board of directors has approved the purchase and the acceptance of the transfer of the entire business from KPN Holding Co., Ltd. (KPNH). The acquisition is valued at Bt4,032 million. PRIN plans to pay for half of the acquisition with a share swap and half with the proceeds from a private placement of newly issued ordinary shares.
The “developing” CreditAlert reflects the uncertainty over the success of the transactions, which are subject to approval by PRIN’s shareholders and the success of PRIN’s planned capital increase via the private placement. In addition, the rating and/or outlook of PRIN will depend on its post-acquisition business and financial profiles.
In the first stage of the acquisition, KPNH will acquire 100% of the equity of KPN Group Corporation Co., Ltd. (KPNGC). KPNGC is a residential property developer, mainly focusing on condominium projects. KPNGC’s main assets are the costs of development for four projects: The Capital Ratchaprarop-Vibha, The Capital Ekamai-Thonglor, The Capital Diplomat Sathorn, and The Diplomat 39. The total value of the four projects is Bt9,327 million. Presales of the four projects amount to Bt7,515 million. In the second part of the acquisition, PRIN will acquire 100% of KPNGC from KPNH. PRIN will pay Bt504 per share or Bt4,032 million to KPNH. PRIN will give KPNH 960 million newly issued ordinary shares of PRIN, worth around Bt2,016 million, and Bt2,016 million in cash. The cash payment is expected to come from the proceeds of selling of 960 million newly issued ordinary shares of PRIN, at a price of Bt2.10 per share, via a private placement. PRIN will also assume the remaining debts of KPNH, after deducting the cash payment made to KPNH, on the transfer completion date.
After the transaction completes, the shareholding of the Kovitchindachai family, PRIN’s major shareholder, will reduce to 16% from 41.1%. KPNH will own 30.57% of PRIN, and will become PRIN’s major shareholder. Therefore, KPNH is required to make a tender offer for all securities of PRIN. However, KPNH plans to ask for the waiver for the tender offer. The tender offer can be waived if more than three-fourths of the number of PRIN’s shareholders with voting rights in attendance at the shareholders’ meeting approve the waiver. The shareholders’ meeting will be held on 28 August 2015.
TRIS Rating will closely monitor the transaction and resolve the CreditAlert once the transaction has been finalized, and a thorough analysis has been conducted.
Company Rating: BBB- CREDITALERT DESIGNATION: Developing
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