Bangkok--27 Sep--Fitch Ratings Fitch Ratings (Thailand) Limited has today assigned a National Long-term rating of 'A+(tha)' with a Stable Outlook to Siam Cement Public Company Limited's (SCC) upcoming senior unsecured and unsubordinated debentures No.2/2007, amounting up to THB10 billion, due 2011. The new debentures will be used to refinance the company's maturing debentures as well as to invest in its planned new projects. The ratings are based on SCC's good revenue diversification, its leading position and strong brand recognition in the domestic market, as well as its relatively strong cash flow generation and a moderate financial leverage target. The group's debt serviceability and financial flexibility is further supported by its strong access to the local debt capital market. Nonetheless, SCC faces continued margin pressure due to rising energy costs, an impact from large excess supply and competitive operating environments in all its core businesses. SCC has earmarked THB88.1bn for its investment plans during 2007-10, mainly comprising its second naphtha cracker and downstream projects, a new investment in the packaging paper line in Vietnam, the new printing and writing plant in Thailand and an efficiency improvement programme for the cement division. In light of its large investment plans, SCC's financial leverage is likely to increase, although the company should in general be able to maintain its net debt to EBITDAR ratio in line with the long term leverage target of 2.5x. Other key credit concerns also include the execution risks of these new investments. In H107, SCC's EBITDAR (pre-dividend income) declined by 5% yoy to THB21.2bn, due largely to margins pressure as a result of higher fuel costs in cement production and rising raw material costs in the paper and packaging division, together with the effect of THB appreciation on its exports revenue. SCC's EBITDAR (pre-dividend income) margins declined to 16% in H107 from an average of 18% in 2006. Including dividends from associates, its EBITDAR declined by 6% yoy to THB25.5bn in H107. Despite the weak operating results in H107, SCC expects its earnings to pick up in H207, driven by expected higher petrochemical sales volume and continuously favourable petrochemical spread margins. SCC's net debt declined to THB95.2bn at end-H107, from THB103bn at end-2006 thanks to some divestment of shares in its non-core investments. Despite a moderate decline in net debt, SCC's net debt to last-twelve-month EBITDAR ratio improved marginally to 2.1x at end-H107, from 2.2x at end-2006, due to the effect of less favourable earnings performance. Including dividends from associates, adjusted net debt to last-twelve-month EBITDAR ratio remained unchanged at 1.9x from end-2006. SCC's large scheduled investments are likely to weaken its financial leverage to the range of 2.0x-2.5x in 2007-2009, while expected stronger EBITDAR growth from capacity expansion should help improve its financial leverage to below 2.0x after 2010. The Stable Outlook is based on the expectation that SCC's revenue diversification and leading position in its core businesses, its solid EBITDAR base as well as dividends received from its associates will help maintain a moderate finance leverage. Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with sub- or low-investment grade international sovereign 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. Contacts: Wasant Polcharoen, Soamsiri Chadavadh, Vincent Milton; Bangkok, +662 655 4755. Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6336 0095. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. 101 Finsbury Pavement, London, EC2A 1RS