TRIS Rating Affirms Ratings of “AA-/Stable” to “RATCH”and “AA/Stable” to “RATCHGEN”and Secured Debentures

The “stable” outlook of RATCH reflects the expectation that the company will receive reliable dividend income from RATCHGEN and its power plant investments. With Bt5,000-Bt6,000 million in dividends received per annum, RATCH should be able to fund most of its investments with internal cash flow.

TRIS Rating has also affirmed the company rating of RATCHGEN and the rating of its senior secured debentures at “AA” with “stable” outlook. The ratings reflect RATCHGEN’s stable cash flow from the well-structured and state-of-the-art Ratchaburi power plant, long experience in the power sector, and its proven record of managing power plants. Declining demand for electricity may have no immediate impact on the company’s cash flow. However, a drop in demand will lower the dispatch level and expose the company to higher operational risk.

The “stable” outlook of RATCHGEN reflects the expectation that the company will continue to receive stable cash flows from the Ratchaburi power plant. The power units of the plant are expected to maintain their operating performance in line with the PPA targets.

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 September 2008, EGAT held a 45% stake in RATCH, followed by the BANPU Group (14.99%), and the Social Security Office (4.92%). Currently, RATCH’s power portfolio comprised five power plants with total electricity generating capacity of 4,501 megawatts (MW). As of December 2008, RATCH’s investments in power plants totaled Bt23,348 million.

In 2008, RATCH received dividend income of Bt5,359 million mainly from the two power plants of its subsidiaries -- RATCHGEN and TECO. RATCHGEN continues to be the major contributor, constituting 84% of RATCH’s total capacity and generating 93% of RATCH’s dividend income. Ratchaburi Power Co., Ltd. (RPCL), another IPP project in the RATCH portfolio, successfully started commercial operation in 2008. With a net profit since the first year of operation, RPCL is expected to provide a dividend of approximately Bt300-Bt400 million per year to RATCH, starting from 2010 onwards. RATCH’s investment policy has been conservative. All power plants in its portfolio have long-term power purchase agreements (PPAs) with EGAT. Because both GDP and electricity consumption were lower than expectation in 2008, the National Energy Policy Council (NEPC) has recently revised the Power Development Plan 2008-2021 (Revision II) to reflect lower demand for electricity. The revision includes a one-year delay in power purchases from IPP projects and a two-year delay in power purchases from Laos.

TRIS Rating said about RATCHGEN that it is a wholly-owned subsidiary of RATCH. The company is the largest private power generating company in Thailand, with total installed capacity of 3,645 MW, representing 12% of Thailand’s total installed capacity as of December 2008. EGAT has 25-year PPAs with RATCHGEN, while PTT PLC has a 25-year gas sale agreement (GSA) with the company.

For the first nine months of 2008, RATCHGEN’s combined cycle gas turbine units (CCGT) in the Ratchaburi power plant continued to outperform the target, reaching an average plant availability level of 89% and a dispatch level of 77%. For the thermal units, though they can maintain average availability as high as 92%, the dispatch level for the first nine months of 2008 declined to 52%. The drop was due to an insufficient supply of natural gas from PTT and weak demand for electricity throughout the country. Electricity sales in 2008 reached Bt42,183 million, net profit was Bt5,489 million. The debt service coverage ratio (DSCR), excluding changes in reserve accounts and working capital, was 2.0 times as of December 2008 -- End

Company Rating: Affirmed at AA- Rating Outlook: Stable Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN) Company Rating: Affirmed at AA Issue Rating: RG106A: Bt3,000 million senior secured debentures due 2010 Affirmed at AA Rating Outlook: Stable Copyright 2009, 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.

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