S Expands to Industrial Estate Business by Acquiring 3 PPs with Total Capacity of 400MW

Singha Estate Public Company Limited (S) has announced that its Board of Directors have approved the investment in Park Industry Company Limited, Angthong Power Company Limited, B.Grimm Power (Ratchaburi) 1 and 2.

 

According to the resolution of the Board of Directors of the company No. 7/2021 on 8 March 2021, the Board of Directors of S approved S.IF., a newly established subsidiary which the company holds 99.99% of total issued and paid-up shares, to invest in industrial estate development and power business by acquire the following assets including, 1) acquisition of 100.00% ordinary shares of Park Industry Company Limited from related person, 2) acquisition of 30.00% ordinary shares of Angthong Power Company Limited from related person, 3) acquisition of options to acquire at least 30.00% ordinary shares of 3.1) B.Grimm Power (Ratchaburi) 1 Company Limited and 3.2) B.Grimm Power (Ratchaburi) 2 Company Limited from Prime Harvestment Ltd.

 

The Investment in Park Industry Company Limited
S.IF. to acquire 5,000,000 ordinary shares of Park Industry Company Limited (PIC) out of 5,000,000 outstanding shares, representing 100.00 percent of total issued shares at par value of 100 baht per share from Boon Rawd Brewery Company Limited (Boon Rawd), a major shareholder of the company. PIC is the owner of approximately 1,790.56 rai of land for industrial estate development under the Notification of Industrial Estate Authority of Thailand dated 27 April 2020 located in Tambon Lakfah and Tambon Chaiyaphum, Chaiyo District in Angthong Province.

The transaction value for ordinary shares is approximately 510.00 million baht which will be paid as milestone payment. Currently, PIC has an existing shareholder’s loan from Boon Rawd with an outstanding amount of 640.00 million baht (existing loan with PIC prior to the acquisition) and will be repaid in installments.

S expects that both amounts, including the carrying cost of amount not exceeding 185.44 million baht, will be fully paid to Boon Rawd within December 2027. Moreover, S will need to invest additional 1,725.72 million baht for project development post acquisition resulting in total transaction value for investment in PIC of approximately 2,421.16 million baht.

 

The Investment in Angthong Power Company Limited
S.IF. to acquire 450,000 ordinary shares of Angthong Power Company Limited (ATP) out of 1,500,000 outstanding shares, representing 30.00 percent of total issued shares at par value of 1,000 baht per share from Whitefords United Pte. Ltd. (Whitefords). Whitefords, which is established under the Singapore law, is 50.00 percent held indirectly by Boon Rawd, major shareholder of the company. ATP generates electricity and steam with a 123 MWh Co-Generation power plant.

ATP is a gas-fired power and steam producer with a 25-year Power Purchase Agreement (PPA) with Electricity Generating Authority of Thailand (EGAT) from commercial operation date (COD) on 4 May 2016. The transaction value for investment in ATP is approximately 557.01 million baht.

 

The Investment in B.Grimm Power (Ratchaburi) 1 and 2
S.IF. to acquire option to acquire no less than 30.00 percent ordinary share (Option) of B.Grimm Power (Ratchaburi) 1 Company Limited (BGPR 1) and B.Grimm Power (Ratchaburi) 2 Company Limited (BGPR 2) at par value of 100 baht per share from Prime Harvestment Ltd., a company established in the British Virgin Islands (Prime Harvestment). BGPR 1 and 2 generate electricity and steam with 140 MWh Co-Generation power plants each.

The Option value of BGPR 1 and BGPR 2 is approximately 15 million baht and S will invest in BGPR 1 and BGPR 2 through a capital increase of 30.00 percent stake at an exercise price equal to par value post acquisition of Option which will expire on 1 May 2021. The capital increase for project development of two projects is approximately THB 820.07 million hence the transaction value of investment in BGPR 1 and BGPR 2 is approximately 835.07 million baht.

 

S stated that its vision and mission to become a leading integrated property developer leads to continuous progress seeking investment opportunities to strengthen its competitiveness and the organization. This includes diversifying the income sources by balancing between recurring and non-recurring income. The industrial estate business allows the company to diversify its customer base from “consumer” to “industrial” while providing recurring income from related utilities sales. The company will become more resilient with a solid foundation to grow sustainably.

The aim for an acquisition in PIC is to develop industrial estate in Angthong province. PIC has been developing industrial estate focusing on food and agricultural sectors per the resolution of the IEAT dated 23 April 2020.

The expected benefits from the acquisition of ATP which operates co-generation power plant under the management of BGRIM includes 1) cash flow stability from the existing power purchase agreement (PPA) with EGAT (remaining period of 20 years) and 2) additional capacity to supply electricity and steam to potential industrial users in the PIC’s industrial estate.

Lastly, the expected benefits from the acquisition of options to acquire shares in BGPR 1 and BGPR 2 is to strengthen recurring income for the company from the sales of electricity to EGAT. Furthermore, both plants have excess capacity to sell electricity to industrial users within PIC’s industrial estate. By having additional 2 power plants within PIC will enhance PIC’s competitiveness and attractiveness to attract potential tenants.

 

Considering the appropriateness of the Transaction, Avantgarde Capital Co., Ltd, as the IFA, analyzes the objectives of entering into the Transaction, the operation capability of PIC, ATP, BGPR 1 and BGPR 2, current and future operational policy including the condition of the industrial estate development and power plant business analysis to analyze the appropriateness of the Transaction.

The IFA summarizes that entering into the Transaction aligns to the company’s long-term strategy in developing and support the business of industrial estate in order to become the complete cycle real estate developer. As a result, the ccompany will have opportunities to generate long-term continuous returns for sustainable growth. Therefore, the IFA has an opinion that the Transaction is reasonable and will benefit the company and shareholders should approve the Transaction.

 

S stated that the company will enter into the Transaction after the approval of the 2021 Annual General Meeting of Shareholders which will be held on 23 April 2021. S expected the transaction to be completed within quarter 3 of 2021.