PDI: Shifts from Power Energy to Hotel Industry

Padaeng Industry Public Company Limited (PDI) had been staying quietly in the corner for ages until recently. PDI returned to the market eye after announcing a few significant transactions including the disposal of its most valuable assets in order to invest in 2 hotels worth 2,805 million baht, first time ever stepping into the hospitality business. 

 

However, the cash and cash equivalents of PDI was only 836 million baht as of the end of the third quarter of this year, which is insufficient for investment. Therefore, PDI has to dispose of 7 solar farms with a total installed capacity of 36.4MW to Bangkok Aviation Fuel services Public Company Limited (BAFS) at the approximately total sale price is 1,705 million baht.

 

PDI also approved the increase of the Company’s registered capital by issuing 301.33 million new ordinary shares, dividing the allocation into 1) 226 million ordinary shares to the existing shareholders of the Company in proportion to the number of shares held by each shareholder (Right Offering) and 2) 75 million ordinary shares by issuing warrants to existing shareholders in proportion to the number of shares each shareholder holds.

 

As it said above, the objective of disposal of assets is to raise fund for an acquisition of 2 hotels; Four Seasons Hotel Bangkok at Chao Phraya River and Capella Bangkok, from Country Group Development Public Company Limited (CGD), the parent company of PDI and parts of Country Group Holdings Public Company Limited (CGH). 

 

This move comes with a question…why did PDI sell its recurring income like solar farm business and shift to hotel..?

 

Furthermore, the hospitality industry is currently struggling to survive amid Covid-19 pandemic that keeps tourists away. Despite the coronavirus vaccine already available, the recovery of hotel business is still uncertain.  

 

On the other hand, this transaction would be a necessity of CGD as PDI’s parent company has previously invested in a luxurious riverside mixed-use project, Chao Phraya Estate, encompasses over 35-2-68 rai with the project value of 32,000 million baht, but the unit transfer has not meet the target due to Covid-19 pandemic. 

 

Consequently, CGD has to dispose of 2 hotels in hopes for boosting its liquidity. As of the end of 3Q20, CGD’s current portion of long-term liabilities was 4,400 million baht…driving CGD to solve this problem.