Glow Energy Plc to buy Thai National Power

Construction News

US$1m-per-MW price includes existing debt

Glow Energy Plc, the SET-listed private power producer, will proceed with plans to acquire the Thai unit of England-based Independent Power Corporation (IP) for 7.7 billion baht after Glow shareholders endorsed the acquisition last Friday.

Natthapatt Tanboon-ek, Glow’s vice-president for finance and investor relations, said the acquisition of a 100% stake in Thai National Power Co will cost 1.7 billion baht, while the other 6 billion will cover TNP’s existing debt including 3 billion to complete its second small power producer (SPP) project.

The deal follows the merger early this year between IP and GDF Suez, the world’s largest independent power producer and Glow’s majority stakeholder.

This new transaction will allow IP and GDF Suez to consolidate their power interests in Thailand under Glow.

“We expect the acquisition will be completed this month, meaning all of TNP’s assets transferred to Glow,” said Mr Natthapatt.

He said IP’s assets include a 140-megawatt gas-based power plant in Rayong’s Pluak Daeng district and a 110-MW gas-fuelled plant under construction nearby that is schedule to start operating by the end of next year.

Mr Natthapatt said Glow’s debt-to-equity ratio will rise to as much as 2:1 this year from 1.7 or 1.8 before the acquisition.

As a result, the company is expected to miss its goal of lowering the ratio to 1:1 by mid-2015. The new projection is late 2016.

“We may refinance 3 billion baht worth of TNP’s existing debt in a bid to reduce the interest rate burden,” said Mr Natthapatt.

At the same time, Glow has entered into a partnership with Hemaraj Land and Development to develop a US$250-million wind farm of 100-MW capacity in Chaiyaphum province.

Hemaraj Energy, wholly owned by Thailand’s top industrial estate developer, owns 51% of Glow Hemaraj Wind Co Ltd and Glow Energy the rest.

Hemaraj and Glow are joint venture partners in Gheco-One, a 660-MW independent power producer project to be completed this year.

“Both parties have agreed to join hands for a detailed study of the wind project in Chaiyaphum, which is expected to take another year to complete,” said Mr Natthapatt.

Thanachart Security welcomed Glow’s acquisition of TNP.

“We consider the acquisition price of $1 million per MW to be fair,” said Supanna Suwankird, a Thanachart analyst, adding that TNP will lift Glow’s capacity by 9% to 3,211 MW.

She added that while TNP’s profitability is less than Glow’s existing SPP projects, synergies will lower the cost.

GLOW shares closed yesterday on the Stock Exchange of Thailand at 50 baht, down 50 satang, in trade worth 21.4 million baht.


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