Singha: Breaking Up with “Nirvana”..!

At the end of last year, Singha Estate Public Company Limited (S) sold all of its shares equivalent to 51.56% in Nirvana Daii Public Company Limited (NVD) to “Somwattana group”, the second major shareholder of NVD, at a total selling price of Baht 1,793 million baht. 

 

Despite the transaction process has yet to complete, S has begun to clamour that Somwattana group was in breach of the agreement for sale of shares of NVD as S has not received the payment within the specified time.

 

Causing Somwattana group to immediately clarify that the group had no intention to violate the agreement, but it took time for financial documents preparation.

 

Why is S in such a hurry to close this transaction..?

 

The original business of Singha group such as foods and beverages despite being slightly affected by Covid-19 pandemic, is still stable, but the real estate sector is seemingly in coma.  

 

S recorded a loss of 584 million baht for the 2020 nine-month period, cash and cash equivalents was 3,173 million baht, while total liabilities was 42,031 million baht. Current portion of long-term liabilities was 3,524 million baht, which mainly came from long-term borrowings from financial institutions.  

 

Meanwhile, S Hotels and Resorts Public Company Limited (SHR), which most of its hotels in Thailand and overseas have been severely affected by the pandemic, faced a loss of 1,175 million baht for the 2020 nine-month period.  

 

Cash and cash equivalents was 2,408 million baht, but total liabilities was as high as 11,659 million baht. While the current portion of long-term liabilities was 2,052 million baht.

 

Fortunately, Singha, at least, has S Prime Growth Leasehold Real Estate Investment Trust (SPRIME) that is still able to generate profit. For the first nine months in 2020, SPRIME recorded an earnings of 109 million baht.

 

Back to the NVD deal…as soon as entering this year, the aforesaid transaction was finally done after Somwattana group completed the payment of 1,793 million baht, reducing Singha’s stress.  

 

The relationship between the Singha group and Somwattana group is quite interesting. In 2005 “Sornsak Somwattana” has established Nirvana Development Co., Ltd. to operate as real estate developer under the trademarks “Nirvana”, the brand has steadily increased its reputation until being noticed by Singha. Therefore, in 2015, Singha entered into a joint investment with “Sornsak”

 

Singha held 51% stake in Nirvara, bringing the group to become the major shareholder of Nirvara. Meanwhile, existing shareholders of Nirvana took over 3.8% share of Singha.

 

The two groups seem to get along well, so it is quite surprising that they decided to break off relations.