Looking for money for Yadana

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Bangkok Post
December, 3 1999

PRIVATISATION

Ratchaburi issue is biggest in four years

Expected to test investor confidence

Yuthana Priwan

A planned initial public offering for the Ratchaburi power plant will become 
the largest fund-raising campaign in the last four years of the stock 
market's
operation.

The latest major fund raising took place four years ago when TelecomAsia
raised 10 billion baht.

The issue for the Ratchaburi complex will test the confidence of investors 
who
have experienced the economic crisis of the past two years. The Electricity
Generating Authority of Thailand's financial advisers have suggested that 
the
issue price be 20 baht a share. More than one billion shares will be sold 
through
the stock market.

Egat, the National Energy Policy Office (Nepo) and SCB Securities yesterday
jointly presented the highlights of private participation in the Ratchaburi 
project
before 300 stock analysts, brokers and financial institution 
representatives. Egat
hopes to raise 18 billion baht from the share issue, which is expected to 
take
place next September.

SCB Securities managing director M.L. Chayotid Kridakon said both local and
foreign investors tended to respond positively toward the planned share 
sale.
"The comparative advantages of the Ratchaburi project are low financing 
costs,
mostly from the Japan Exim Bank, and that the construction was done at a
very competitive cost. The facilities and transmission system are sufficient 
to
support construction of two new thermal units and a combined-cycle gas
turbine," he said.

The Ratchaburi power plant cost 60 billion baht. Egat will start by setting 
up
Ratchaburi Holding Co early next year with a registered capital of 300 
million
baht as part of its privatisation programme. The holding company,
wholly-owned by Egat, will raise its capital to 7.5 billion baht in the 
third
quarter of next year.

Egat will transfer the ownership of assets such as the power house and
infrastructure to the holding company in 2001, when construction of the
Ratchaburi complex has been completed. The holding company will have to
manage the proceeds it has received from borrowing and fund raising through
the stock market.

Dresdner Kleinwort Benson, Lehman Brothers and SCB Securities, Egat's
financial advisers, also suggested that the holding company's financing
structure consist of 42 billion baht in loans and 18 billion baht in equity.

When the holding company's capital has been raised to 18 billion baht, 
Egat's
shares will be diluted to 45%. A 40% holding will be sold through the stock
market and 15% will be sold to Egat's employees at 10 baht par.

There will also be restrictions to prevent the Egat's employees from taking
advantage of the 10-baht par price. If the public offering price happens to 
be
higher than 20 baht a share, the amount of 10-baht shares set aside for Egat
employees will be reduced from the original 15%.

The holding company will set up a subsidiary to run the Ratchaburi complex 
and supply electricity to Egat.

However, investors remain uncertain about the price of natural gas supplied 
from the Yadana field in Burma because it is more expensive than that 
produced from the fields in the Gulf of Thailand.

Piyasawat Amranand, Nepo's secretary-general, said the state-of-the-art 
power generating units and high capacity would enable the Ratchaburi power 
plant to compete with private facilities under the IPP scheme.

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