Bangkok--8 Jun--Moody's
Moody's Investors Service today has downgraded the Corporate family rating of True Corporation Public Company Limited (True Corp) to B1 from Ba3. The outlook on the rating is stable.
The rating has been downgraded based on concerns over True Corp's ability to comply with lenders' financial covenants after 30th September 2007.
"The operating environment in Thailand continues to be challenging such that the company's financial profile has been constrained, thus causing the company to negotiate covenant waivers with certain of its lenders in respect of its Thai bank syndicated loan. At present, the company has been granted waivers till 30 September 2007," says Laura Acres, a Moody's
Vice President.
"True Corp's financial metrics continue to be affected by ongoing challenges in executing its business plan in the competitive cellular market. Although there has been some improvement so far this year the company's business remains under material pressure and there remains considerable doubt it will be in a position to satisfy the covenants by September ," adds Acres, also Moody's Lead Analyst for the company.
Given this uncertainty, Moody's believes a single B rating is more appropriate for the company, reflecting the lack of stability in its capital profile, particularly at a time when there is considerable regulatory uncertainty in Thailand.
The outlook is stable since Moody's believes there is a likelihood that if a waiver is required -- the banks will grant a further extension in September.
It is unlikely that the rating will be upgraded in the near-to-medium term without the company developing clear headroom under its bank covenants. Moody's would also look for outstanding regulatory issues, particularly with regard to the legality of the concession agreements, to be resolved.
The most immediate likely drivers of negative rating action are: 1) True Move fails to obtain the necessary approval for the extension of the financial covenant breach under its bank facilities or fails to complete its proposed Bt7.9 billion refinancing exercise; and/or 2) True Corp fails to negotiate covenant waivers or amendment on 30th September, 2007
for its own bank facilities.
Headquartered in Bangkok, Thailand, True Corporation Public Company Limited (True Corp), formerly known as TelecomAsia, is an integrated provider of fixed line, broadband, internet, mobile services and cable TV (via the UBC acquisition) in Thailand.
True Corp is listed on the Thailand Stock Exchange and the Charoen Pokphand Group is the major shareholder with approximately 36% shareholding. Its wireless business is predominantly conducted through its 93.3% owned True Move Company Limited (True Move), which is the third largest mobile telecommunications operator in Thailand; and its pay TV
business is conducted through its 91.8% owned True Visions Public Company Limited (True Visions), which is currently the only nationwide provider of pay television services in the country.
Hong Kong
Laura Acres
Vice President - Senior Analyst
Corporate Finance Group
Moody's Asia Pacific Ltd.
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Alan Greene
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
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