$1 Billion Investment for LAOS Hydro

LAOTIAN hydropower company EDL-Generation plans to invest US$1 billion (Bt32 billion) between 2015 and 2020 to boost production capacity from 881 megawatts to 2,272MW.

To raise Bt6.5 billion of that, EDL-Gen will issue debentures in Thailand’s capital market next month. The debentures will have tenors of five to 10 years with interest rates of 5-5.5 per cent per annum, the company’s deputy managing director and chief financial officer, Dr Bounsalong Southidara, told a news conference last week.

The plan is to double annual revenue by 2020, he said.

“We will be the first firm in Laos to issue debentures in Thailand’s capital market,” Bounsalong said. “We are also studying issuing debentures in Laos’ capital market and other countries in Asean such as Singapore and Malaysia, once the capital market opens up after the Asean Economic Community becomes effective in 2015.”

Twin Pine Consulting managing director Adisorn Singhsacha, EDL-Gen’s financial adviser, said the debenture issue would be separated into two or three lots with tenors between five and 10 years. This will depend on market demand.

EDL-Gen is a major private hydroelectric power generator in Laos. The company has total production capacity of 881MW, of which 397MW is sold to Electricite du Laos (EDL), which in turn sells power to the Electricity Generating Authority of Thailand (Egat).

EDL-Gen has registered capital of 4.9 trillion kip (Bt19.9 billion), 75 per cent held by EDL, 5.8 per cent by Ratch-Lao Services Co, and 4.31 per cent by RH International (Singapore) Corporation as of September 29. Ratch-Lao Services and RH International (Singapore) are subsidiaries of Ratchaburi Electricity Generating Holding.

EDL-Gen recorded revenue of 1.32 trillion kip and net profit of 971.74 billion kip last year. In the first half of this year, it reported revenue of 502.41 billion kip and net profit of 326.98 billion kip.

The company is one of three listed on the Lao Securities Exchange (LSX) and accounts for about 80 per cent of the total market capitalisation of the exchange.

Bounsalong said that after issuing debentures worth Bt6.5 billion in Thailand’s capital market, the company’s debt-to-equity ratio would increase from 0.2:1 to 0.4:1. This would leave room to issue debentures in other capital markets, including Thailand’s, to support its $1-billion 2015-20 investment plan.

“If we issued debentures totalling $1 billion, our debt-to-equity ratio would still be lower than 2:1,” he said.

Associate Prof Dethphouvang Moularat, chairman and CEO of the LSX, said this would be the first time a private Laotian firm has raised funds in Thailand’s capital market.

“EDL-Gen is one of the listed com-panies in the Lao Securities Exchange that has enough financial strength to raise capital in this region,” he said.

The debenture issue is awaiting approval from the Public Debt Management Office of the Thai Finance Ministry. Once it gets that, the company will make a filing to Thailand’s Securities and Exchange Commission for its approval.

EDL-Gen expects the process will be complete this month and it will be able to issue the debentures in December, Adisorn said.

Earlier, Twin Pine Consulting appointed three banks as joint lead arrangers for the debenture issue. These are Standard Chartered Bank (Thai), Bank of Ayudhya and TMB.