Bangkok--15 Nov--Moody's
Moody's Investors Service sees no impact on the A3 issuer rating and foreign currency bond rating of PTT Public Company Ltd ('PTT') following its announcement of a proposed acquisition of the coal assets of the Australian Securities Exchange-listed Straits Resources Ltd ('SRL'). The outlook on the ratings remain stable.
SRL is currently demerging its coal assets from its metal assets.PTT proposes paying A$544.1 million, or about THB16.6 billion, for SRL's existing 40% interest in PTT Asia Pacific Mining Pty Ltd ('PTTAPM'), which is also 60%-owned by PTT.
The completion of the acquisition would result in PTT's 100% ownership of PTTAPM, whose major assets are producing coal mines and reserves in Indonesia, as well as coal resources under exploration in Brunei and Madagascar.
The transaction is subject to regulatory approval in Australia and the acknowledgement of the funds remittance from Bank of Thailand.
"This acquisition represents an enlargement of the stakes in coal assets that PTT already owns, and is in line with Moody's expectation of PTT continuing with its investments in the international resources business," says Renee Lam, a Moody's Vice President and Senior Analyst.
"PTT's current A3 ratings can accommodate an acquisition of this scale and nature," says Lam, adding, "The transaction is unlikely to materially impact PTT's leverage immediately, given the acquisition amount of
THB16.6 billion is small when compared to PTT's existing debt of THB366.5 billion, as well as the debt-free nature of the assets to be purchased,"
says Lam.
"With this transaction, we expect PTT to allocate increasing capex to the coal segment, as some of the assets to be acquired are still in exploration stage. Nonetheless, the impact on its financial metrics should be modest," says Lam.
The last rating action on PTT was on October 28, 2010 when Moody's changed PTT's rating outlook from negative to stable, following Moody's outlook change on Thailand's sovereign rating.
The principal methodology used in this rating was Moody's "Global Integrated Oil & Gas Industry" published in November 2009.
PTT -- 51.36% directly owned by Thailand's Ministry of Finance with a further 15.33% held through Vayupak Mutual (government-invested funds) -- is a fully integrated oil, gas and petrochemicals company in Thailand.
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Renee Lam
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
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Gary Lau
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
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