TRIS Rating Affirms Company & Current Issue Ratings of “BECL”and Assigns New Issue Rating Worth Up to Bt1,000 Million at “A/Stable”

TRIS Rating Co., Ltd. has affirmed the company and current issue ratings of Bangkok Expressway PLC (BECL) at “A”. At the same time, TRIS Rating has assigned the rating of “A” to BECL’s proposed issue of up to Bt1,000 million in senior debentures. The outlook remains “stable”. The proceeds from the new debentures will be reserved to refinance BECL’s existing debentures due in August 2012. The ratings reflect a solid track record of traffic volume on BECL’s expressways which translates to reliable operating cash flow, the benefit of being the only toll road system linked to the First Stage Expressway System (FES), and the strong track record of BECL’s management team. These strengths are partially offset by uncertainty over future government transportation policies, the government’s potential intervention in future toll rate adjustments, and the sizable investments required for new expressway concession. The “stable” outlook reflects BECL’s stable operating performance during the concession period. TRIS Rating expects that the company will carefully manage dividend payments and future investments, while maintaining sufficient liquidity and debt service capacity.

TRIS Rating reported that BECL built and operates the elevated Si Rat Expressway (the Second Stage Expressway System - SES) and the Udon Ratthaya Expressway (Bang Pa In-Pak Kret Expressway), known as SES Sector C+. Both expressways were established under 30-year Build-Transfer-Operate (BTO) concessions awarded by the Expressway Authority of Thailand (EXAT). The SES, the extension of SES (Sector D), and the Sector C+ concessions will expire in 2020, 2027, and 2026, respectively. The SES is linked to the First Stage Expressway (FES), which was constructed and has been operated by the EXAT. The roads form a city ring road, with routes to the north, east, southeast, and southwest, creating a comprehensive road network for Bangkok residents. The network provides an alternative to the heavily congested free roads within central Bangkok and the suburbs. BECL shares revenue with EXAT on the urban network (FES and SES Sector A and B). From March 2011 onward, the sharing ratio with EXAT was changed from 50:50 to 40% for BECL and 60% for EXAT. For the suburban network and Sector C+, BECL does not share revenue with EXAT.

TRIS Rating said, traffic volume on BECL’s network has grown steadily since inception. The compound annual growth rate was 3.7% over the past 10 years (2001-2011). In 2011, the average daily traffic volume was 1,024,867 vehicles per day, up 5.2% year-on-year (y-o-y), despite the flooding crisis in Bangkok and Pathum Thani provinces in late 2011. However, average daily toll revenue declined by 6.42% y-o-y to Bt20.02 million, due to a change in the revenue sharing structure with EXAT. TRIS Rating expects that in the medium term, traffic volume on the expressways will continue to grow based on economic growth, a higher population in Bangkok, the expansion of residential housing into the areas surrounding the city, and heavy traffic congestion on free roads. However, higher fuel prices and the likelihood that EXAT will impose value added tax (VAT) on commuter tolls are likely to impact the growth in traffic volume during 2012.

BECL’s financial strength is supported by reliable operating cash flow, though this strength is offset by the company’s fairly high level of leverage. The operating margin remained high at 80% which generated Bt4,603 million in funds from operations (FFO) in 2011. Thanks to the strong traffic volume and cost saving efforts, FFO only slightly declined from Bt4,867 million in 2010, despite the increase in revenue sharing with EXAT. The company occasionally accessed the debt capital market, refinancing its existing debts to take advantage of lower interest rates. BECL’s total debt gradually reduced from almost Bt30,000 million in 2006 to Bt19,044 million at the end of 2011. However, in the medium term, TRIS Rating expects BECL’s leverage will increase from the current level based on the investments it plans to make. The company plans to invest in two new projects: a hydroelectric power plant and an expressway extension. These two projects will require a total of approximately Bt26,000 million in capital over the next five years. The needed funds are expected to be financed by using internal cash flow, general bank loans, and debentures rather than project finance packages. While the hydroelectric power plant project is uncertain, TRIS Rating expects that BECL will sign a concession contract with EXAT on the Si Rat Outer Ring Road Expressway by this year. Construction is due to start in 2012 and finish in 2016. When undertaking a new expressway concession contract, BECL will award the turnkey construction contract to Ch. Karnchang PLC (CK) to mitigate the risk of cost overruns. However, BECL will remain exposed to completion risk and traffic volume risk. TRIS Rating expects the company to maintain the strong liquidity to offset weakening credit quality, due to large investments its plans to undertake, said TRIS Rating. — End

Company Rating: Affirmed at A Issue Ratings: BECL128A: Bt1,895 million senior debentures due 2012 Affirmed at A BECL139A: Bt1,000 million senior debentures due 2013 Affirmed at A BECL13NA: Bt1,100 million senior debentures due 2013 Affirmed at A BECL148A: Bt1,700 million senior debentures due 2014 Affirmed at A BECL144A: Bt1,000 million senior debentures due 2014 Affirmed at A BECL214A: Bt1,000 million senior debentures due 2021 Affirmed at A Up to Bt1,000 million senior debentures due within 2015 A Rating Outlook: Stable TRIS Rating Co., Ltd./www.trisrating.com Contact: [email protected], Tel: 0-2231-3011 ext 500/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand Copyright 2012, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at http://www.trisrating.com/en/rating_information/rating_criteria.html.