Bangkok--12 Jun--TRIS Rating
TRIS Rating has placed the company and issue ratings of True Corporation PLC (TRUE) on CreditAlert with “positive” implication. The rating action follows TRUE’s announced plan to raise Bt65 billion in equity. The plan is expected to help strengthen the company’s financial profile and improve business flexibility.
TRUE’s Board of Directors approved the issuance of 10,077.7 million new shares at Bt6.45 per share, potentially raising the company’s equity by Bt65 billion. About 56% of the new shares will be allocated to existing shareholders, while the remaining 44% will be offered to China Mobile International Holdings Limited (China Mobile), the world largest mobile operator by subscribers. If all the shares are fully and proportionately subscribed, China Mobile will hold 18% stake in TRUE. CP Group’s holding stake in TRUE will decline from 60% to 49%.
TRIS Rating estimated that if most of the proceeds are used to pay down debts, TRUE’s total debts would be reduced by almost half. TRIS Rating considers TRUE’s total debts to include the present value of committed payments to the infrastructure fund. TRUE’s debt to capitalization ratio is expected to improve to 55%, from 94% at the end of March 2014. The debt to EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is expected to decline to 3.5 times from 7 times. TRIS Rating views that TRUE’s stronger capital structure will help reduce interest costs and covenant concerns, as well as increase business competitiveness and flexibility. However, strategic collaboration with China Mobile will likely take time to materialize.
TRIS Rating will fully evaluate TRUE’s credit profile and take actions on ratings or outlook after the recap plan is complete. TRUE’s outlook is likely to be revised upward. However, TRUE’s rating upgrade will be considered together with the level of improvement in operating performance and the sustainability of the new capital structure.
True Corporation PLC (TRUE)
Company Rating: BBBIssue Ratings: TRUE14NA: Bt2,500 million senior unsecured debentures due 2014 BBB-
TRUE15NA: Bt3,500 million senior unsecured debentures due 2015 BBB-
TRUE15NB: Bt4,000 million senior unsecured debentures due 2015 BBB-
TRUE16OA: Bt6,000 million senior unsecured debentures due 2016 BBB-
TRUE174A: Bt7,800 million senior unsecured debentures due 2017 BBB-
TRUE177A: Bt11,213 million senior unsecured debentures due 2017 BBB-
TRUE183A: Bt4,000 million senior unsecured debentures due 2018 BBB-
CREDITALERT DESIGNATION: Positive