BOT grants waiver to SCB
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Siam Commercial Bank, the sole financial adviser to CP All on the Siam Makro deal, has been granted an exception from the Bank of Thailand to the lending limit for a single borrower so that it can participate in a bridge loan for the acquisition.
SCB’s credit support to the Charoen Pokphand Group had already reached somewhere between Bt70 billion and Bt80 billion, so it asked the central bank to allow it to lend up to 60 per cent of its Tier 1 capital of Bt250 billion, up from the single lending limit of 25 per cent.
SCB’s BIS ratio, that between its risk-bearing capital and risk-weighted assets, is currently 15 per cent.
At US$6.6 billion (Bt190 billion), Siam Makro is the largest acquisition deal that has taken place in Thailand, Arthid Nanthawithaya, a senior executive vice president of SCB, said yesterday.
The $11-billion Thai Beverage-Fraser and Neave deal was the largest such deal by a Thai firm outside the Kingdom.
SCB is one of the joint mandated lead arrangers and underwriters of the bridge loan, along with HSBC, Standard Chartered Bank, UBS and Sumitomo Mitsui Banking Corporation.
Since all lenders will contribute the same proportion, and the acquisition will be 90 per cent financed by debt, each bank will be on the hook for at least Bt20 billion.
Besides SCB, two or three local banks will join the bridge loan. Altogether eight banks are expected to support the financing of Bt18.8 billion.
Two-thirds of the bridge loan will be in US dollars.
Since the deal is made in the short term, a bridge loan is a suitable solution. After one year, SCB will help CP All refinance the bridge loan through other instruments such as bonds.
CP Group has the ability to repay debt, particularly CP All, which has cash flow and is debt free. The acquisition will boost CP All’s net debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) ration to 5 times, which is not high. This gave the financial houses confidence to grant the huge loan.
SCB will have another big merger/acquisition deal this year, which will be made by a local conglomerate, but it will be smaller than this one, Arthid said.
In the deal pipeline are an Bt80-billion infrastructure fund and two real-estate investment trusts with market caps of Bt10 billion and Bt6 billion.
