Bangkok--Dec 6--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed Bangkok Aviation Fuel Services Public Company Limited’s (“BAFS”) National ratings at Long-term ‘A-(minus)(tha)’ with Stable Outlook and Short-term ‘F2(tha)’ following the company’s renegotiation of a long-term loan’s amortisation schedule due to the delay in the opening of the new airport to mid-2006. The agency notes that BAFS’s 2005 operating performance remains solid.
According to BAFS, the company is in negotiation with Bangkok Bank Plc (“BBL”), one of its main creditors, to extend the principal repayment schedule for a THB2.0 billion eight-year loan on the back of the delay in the commercial opening of the new international airport, Suvarnabhumi Airport (“SA”). Under the current loan agreement, BAFS’s principal repayment of the THB2.0bn loan is quarterly instalments from March 2007 to December 2013. BAFS has now proposed to BBL quarterly instalments from March 2008 to December 2014. BAFS’s senior management has indicated that the extension of period to start principal repayment would not constitute any breach of the company’s existing loan agreements. The company expects to reach agreement with BBL shortly. In the event that the extension is not agreed, the company should still be able to meet the existing repayment schedule, although BAFS may need to reduce its dividend payments.
While Fitch has already factored into BAFS’s credit profile a delay in the airport opening to mid-2006, a further delay in the opening of the new airport would prolong the period of the company’s high leverage and weaken debt serviceability, which could adversely affect the company’s credit ratings.
BAFS’s consolidated revenue increased 11% yoy to THB873 million for 9M05, driven by a 10% service fee hike in November 2004. Meanwhile, its EBITDA rose 15% yoy to THB551m in 9M05. Nonetheless, BAFS’s financial leverage has risen significantly as a result of its debt-funded investments at the new airport. BAFS’s net debt continued to increase to THB3.2bn at end-9M05 from THB1.5bn at FYE04. Its net debt-to-annualised EBITDA ratio weakened to 4.4x at end-9M05 from 2.6x at FYE04. BAFS’s net debt-to-EBITDA ratios are expected to weaken further to about 5.0x by end-2005 and 4.0x in 2006, which, while high, are expected to be temporary. The stronger EBITDA growth once the new airport is open in mid-2006 should see financial leverage decline to 2.0x-2.5x by 2007/08.
Established in 1983, BAFS is the sole provider of aviation fuel services at Bangkok International Airport, which accounts for over 95% of the country’s fuel uplift volume. At SA, BAFS will be the single operator for the main depot and the hydrant pipeline services, while it will be one of the two operators to operate the into-plane service. BAFS’s largest shareholder is Thai Airways with 22.6%, while other shareholders include PTT, AOT, ESSO, Caltex, Shell, Air Total and ExxonMobil Aviation, holding another 40%. Listed on the Stock Exchange of Thailand in 2002, the company’s market capitalisation was THB3.8bn at end-November 2005.
CONTACT:
Wasant Polcharoen,
Lertchai Kochareonrattanakul,
Vincent Milton, Bangkok,
Tel: +662 655 4755
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such 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.
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