ECF-FPI: Step Back to Move Forward.!?

It was quite a surprise that two buddies like East Coast Furnitech Public Company Limited (ECF) and Fortune Parts Industry Public Company Limited (FPI) agreed to dispose of investment in Safe Energy Holdings Co., Ltd. (SAFE), the investor for biomass power plant business, a company that was once planned to be listed on the stock market. 

 

As ECF saw a limited growth of furniture business both domestic and overseas, the Company shall seek investment opportunities and it ended up with a renewable energy business. Resulting in the acquisition of 33.37% stake in Safe Energy Holdings, the company which operates as an investment company. 

 

Also, FPI was faced with a limited growth of car components manufacturing business and desired to diversify its sub-businesses, FPI thus teamed up with ECF to jointly invest in Safe Energy Holdings at the proportion of 33.37% same as ECF. 

 

Safe Energy Holdings was literally cooperated by 3 large parties; ECF, FPI and Prize of Wood Holdings Co., Ltd.. Regarding this transaction, ECF and FPI will dispose of 33.37% of each party to Prize of Wood Holdings at the same time, which brings both companies to book 233.88 million baht each. 

 

Safe Energy Holdings is a holding company which, currently invests in biomass power plant business with an installed capacity of 7.5 megawatts, a wood chips factory in Narathiwas province, and a Biomass Gasification power plant with an installed capacity of 2 megawatts in Phrae province (At present, Biomass Gasification power plant could generate income 1 megawatt).

 

Wondering why ECF and FPI sold all of their shares in Safe Energy Holdings at the time.

 

The reason could be because 1) Safe Energy Holdings is in the investment stage and has yet to generate the income, reflecting from performances in the past 3 years seem not sound, the loss has been increasing year by year. In 2017, the loss was 2 million baht and total revenue was only 1 million baht. In 2018, the loss rose to 10 million baht compared to a total revenue of 3 million baht. And in 2019, the loss continued to grow to 12 million baht, while total revenue dropped 2 million baht.

 

Moreover, there are not any power development plans (PDP) announced yet, so the situation of Safe Energy Holdings is fairly uncertain. 

 

2) It might be because the two could not get along well, therefore saying goodbye to each other is a better idea. 

 

Or 3) the policy of the Ministry of Energy on alternative power is yet to be clear, but the power supply is already redundant.

 

However, the disposal of Safe Energy Holdings will boost the liquidity of both ECF and FPI and the cash from this transaction will be the working capital for operating the business under the current circumstance.