Rise seen in borrower status of SSI
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Performance of UK plant lifts firm: SCB
Sahaviriya Steel Industries stands a good chance of being upgraded to the status of a normal borrower, from one with possible impaired loans, after the operational improvement of its plant in Britain, according to one of its creditors.
Arthid Nanthawithaya, senior executive vice president of Siam Commercial Bank (SCB), said recently that after SSI Industries UK restarted its pulverised coal injection (PCI) project, operating costs would be reduced, which will benefit the subsidiary’s margin and earnings before interest, taxes, depreciation and amortisation (EBITDA).
The bank expects SSI to be upgraded to a normal borrower next year, he said.
Debt rescheduled
Last year, SSI borrowed Bt24 billion in long-term and working-capital loans from SCB, Krungthai Bank and Tisco Bank and US$600 million (Bt18.6 billion) from the three lenders to finance its operations in Britain. However, SSI has rescheduled the debt to 2020-21 from 2018.
SCB has already set aside loan loss provisions excluding the collateral of the debtor, following the Bank of Thailand requirement.
SSI will inject the last proceeds of its capital-increase plan before the end of this year to boost the liquidity of SSI and its British subsidiary.
“We have closely monitored this customer every week and visited the plant in the UK. If the production cost of the PCI project is as planned, we hope the problems will be solved,” Arthid said.
SSI has repaid principal and interest to lenders for the loan that financed the operation in Thailand, he said. A banking source said that in the third quarter of next year, SSI would start paying principal and interest for the credit line that supports the British operation.
Even though SCB did not take full provisions against this customer, Tisco Bank did at the end of last year. Tisco Bank granted a credit line of Bt3.7 billion to SSI, mostly to support the UK business.
According to the central bank’s debt-restructuring regulations, besides doubtful loan reserves, financial institutions will classify the debtor.
SSI is a possible impaired loan at Tisco Bank, which is the first category before special-mention loans and non-performing loans, the source said.
The three lenders are upbeat about the PCI project since it will help save 20-30 per cent on production costs. Britain is a key driver of the financial performance of SSI.
SSI is expected to witness a loss this year before breaking even next year, the source added.
