Bangkok--26 Jun--TRIS Rating TRIS Rating Co., Ltd. has upgraded the ratings of Banpu PLC (BANPU) and its debentures to “AA-” from “A+” with “stable” outlook. The upgrades are based on BANPU’s strengthened financial profile following greater contribution from its power business, the successful listing of its Indonesian subsidiary, and favorable coal prices. The ratings also take into consideration the company’s proven record in the regional coal market and reliable dividends from the power business. However, the uncertain investment climate in Indonesia and China along with rising operating costs remains rating concerns. The “stable” outlook reflects TRIS Rating’s expectations that BANPU will be able to maintain its strong financial position despite heavy expenditures during 2008-2010. Rising operating costs and the challenge to maintain reserve life will be partly mitigated by favourably high coal prices and predictable dividends from the power business. TRIS Rating reported that BANPU is one of the major energy companies in Asia. It was established in 1983 as a coal miner in Thailand. The company has continuously expanded its coal operations into Indonesia and China, and simultaneously increased its power business investment in Thailand and China. During the last three years, the coal business accounted for approximately 82% of the company’s earnings before interest, tax, depreciation and amortization (EBITDA), while the remaining 18% was from the power business. In terms of country diversification, approximately 70% of the company’s total EBITDA was from Indonesian operations, 21% was from Thailand, and 9% from China. Of all BANPU Group’s coal production in 2007 totaling 23.6 million tonnes, 75% was from coal mines in Indonesia. BANPU’s Indonesian coal production of 17.6 million tonnes in 2007 made it the fourth largest producer in Indonesia, with an 8% market share. The favorable coal price, expansion of the Bontang port and a higher proportion of high quality coal from the Trubaindo mine will alleviate BANPU’s margin pressures from rising mining and operating costs. As of December 2007, BANPU’s investment cost in the power business was worth Bt12,205 million, of which 73% was in Thailand and 27% in China. BANPU’s power portfolio in Thailand comprises a 50% holding in BLCP Power Ltd. (BLCP), and a 14.99% holding in Ratchaburi Electricity Generating Holding PLC (RATCH). For 2007 operations, the company received Bt3,457 million in dividends from its power portfolio. Greater dividends received from its power business enables the company to better withstand fluctuations in coal prices. Listing PT Indo Tambangraya Megah Tbk (ITM) on the Indonesian Stock Exchange has provided BANPU with more fund raising alternatives to support BANPU’s business in Indonesia. ITM is the holding company of BANPU for the coal business in Indonesia. ITM’s net proceeds from the initial public offering of approximately Bt11.9 billion helped improve BANPU Group’s equity base and capital structure. TRIS Rating said, BANPU will use its EBITDA of approximately Bt13,000 million per year to mostly finance its upcoming capital expenditures of approximately Bt8,000 million per year, equity investment of Bt6,000-Bt7,000 million in the Hongsa Project, and the scheduled debt repayment of Bt4,000 million per year during 2008-2010. Additional borrowing of approximately Bt13,000 million will be needed for the Asian American Coal Inc. (AACI) acquisition. AACI is the holding company of BANPU for its coal business in China which currently has coal production of 3.1 million tonnes a year. Increased ownership in AACI from 21.6% to 100% is in line with BANPU’s strategic plan to diversify its coal reserves and asset base to a more balanced mix between Thailand, Indonesia, and China. After debt-financed acquisition of US$420 million, BANPU’s net debt will increase to Bt19,000 million. However, its net debt-to-capitalization ratio of 32% after acquisition, remains below its policy of less than 50%. Banpu PLC (BANPU) Company Rating: Upgraded to AA- from A+ Issue Ratings: BP093A: Bt500 million senior debentures due 2009 Upgraded to AA- from A+ BP109A: Bt2,000 million senior debentures due 2010 Upgraded to AA- from A+ BP10NA: Bt1,500 million senior debentures due 2010 Upgraded to AA- from A+ BP10NB: Bt1,000 million senior debentures due 2010 Upgraded to AA- from A+ BP111A: Bt1,500 million senior debentures due 2011 Upgraded to AA- from A+ BP15NA: Bt2,500 million senior debentures due 2015 Upgraded to AA- from A+ Rating Outlook: Stable