Bangkok--27 Jul--TRIS Rating
TRIS Rating Co., Ltd. has affirmed the company rating of Ratchaburi Electricity Generating Holding PLC (RATCH) at “AA-” with “stable” outlook. At the same time, TRIS Rating has also affirmed the company rating of Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN) and the ratings of its senior secured debentures (RG086A, RG106A) at “AA” with “stable” outlook.
The “AA-” rating of RATCH reflects reliable dividends from its wholly-owned operating subsidiary, RATCHGEN, its good quality power plant portfolio and its conservative investment policy. The rating also takes into consideration a structural subordination of RATCH’s creditors and uncertainty about the deregulation of the power industry. While the “stable” outlook reflects an expectation that RATCH will receive reliable dividend income from RATCHGEN and other power plant investments. Besides, RATCH is expected to maintain its conservative investment policy.
The “AA” ratings of RATCHGEN and its secured debentures reflect its stable cash flow from the well-designed project structures, state-of-the-art power plants, the long experience in the power sector, and its proven record of managing power plant operations. The ratings also take into consideration the operation risk of the power plants and uncertainty about the planned deregulation of the power industry. While the “stable” outlook reflects TRIS Rating’s expectation that RATCHGEN will continue to receive stable cash flows from the Ratchaburi power plants. Furthermore, the plants are expected to maintain their operational performance in line with the targets of the power purchase agreements (PPA).
TRIS Rating reported that RATCH was established in 2000 as a holding company to purchase the Ratchaburi power plant from the Electricity Generating Authority of Thailand (EGAT). As of March 2006, EGAT held a 45% stake in RATCH, followed by BANPU PLC (14.99%). Currently, RATCH’s power portfolio consists of four power plants with a total electricity generating capacity of 4,499 megawatts (MW) and total investment cost of Bt20,574 million as of March 2006. For 2005 operations, RATCH received dividend income of Bt6,046 million from its two power plants, RATCHGEN and Tri Energy Co., Ltd. (TECO). RATCHGEN continues to be the major investment, constituting 81% of RATCH’s total capacity and generating 92% of RATCH’s dividend income. RATCH’s investment policy has been conservative. All power plants in its portfolio have long-term PPAs with EGAT. RATCH is prepared to participate in the upcoming bidding for independent power producer program (IPP), though the bidding criteria and constraints remain unclear.
TRIS Rating said about RATCHGEN that the company is a wholly-owned subsidiary of RATCH. RATCHGEN is the largest private power generating company in Thailand, with total installed capacity of 3,645 megawatts (MW), representing 14% of Thailand’s total installed capacity. RATCHGEN has 25-year PPAs with EGAT and a 25-year gas sale agreement (GSA) with PTT PLC. The company’s operating performance in 2005 was satisfactory though there was a fire accident in October 2005. The equivalent availability factor (EAF) of the thermal and combined cycle units was maintained in line with
the PPAs at 86.1% and 90.5% respectively. Electricity sales recorded an annual increase of 10.9%, from Bt39,714 million in 2004 to Bt44,035 million in 2005. The debt service coverage ratio (DSCR) without reserve accounts and after net changes in working capital was 2.2 times in 2005.
TRIS Rating said, RATCHGEN had a fire accident on its Flue Gas Desulfurisation (FGD) of the Thermal Unit 1 in October 2005. The direct impact of the accident on RATCHGEN’s 2005 performance was minimal because the accident happened when the unit was shut down. The replacement cost of US$55 million will be fully covered by insurance during the replacement period of 18 months ending July 2007. Any revenue lost because of the FGD will be covered by business interruption insurance.
Ratchaburi Electricity Generating Holding PLC (RATCH)
Company Rating: Affirmed at AA-
Rating Outlook: Stable
Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN)
Company Rating: Affirmed at AA
Issue Ratings:
RG086A: Bt7,000 million senior secured debentures due 2008 Affirmed at AA
RG106A: Bt3,000 million senior secured debentures due 2010 Affirmed at AA
Rating Outlook: Stable
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