TTA to sell shares to increase capital early next year

This is the second time the company has moved to increase capital, after doing so last March. 

TTA president and chief executive officer Chalermchai Mahagitsiri said about Bt4.17 billion of the new capital would reinforce the operations of its subsidiaries, with the rest used for debt repayment and reserves for future investment.

It hopes for a turnaround in its fiscal year 2014 after recording a large net loss in its previous fiscal. The company announced a net loss of Bt5.08 billion for its 2013 fiscal year ended September 30, compared with a net loss of Bt4.49 billion in fiscal 2012. 

Significant non-cash extraordinary items totalling Bt4.84 billion drove the 2013 loss. The largest of these was a Bt3.9-billion impairment taken against the dry bulk shipping fleet of wholly owned subsidiary Thoresen Shipping Singapore, after an analysis of expected future freight rates and key operating costs. 

In addition, a Bt120-million non-cash impairment was taken against TTA’s investment in Merton Group (Cyprus) Ltd as well as a write-down of Bt596 million against goodwill related to TTA’s acquisition of Unique Mining Services (UMS). 

The moves were taken in strict adherence to TTA’s conservative financial-reporting standards, it says.

“We enter fiscal 2014 with improved prospects across our portfolio of businesses,” Chalermchai said. “In the dry bulk shipping industry, we have already begun to see gradual signs of a recovery, while the impairments we have taken against the fleet have resulted in a significantly lower asset cost base, with the average daily depreciation on Thoresen Shipping’s dry bulk vessels being reduced by 48 per cent.  “We will return to profitability in fiscal 2014. Mermaid continues to operate in a strong environment and should be able to maintain the positive momentum it has established by leveraging its expanded footprint and excellent service record. 

“Baconco continues to seek growth opportunities across both its fertiliser and warehousing businesses and will launch a new granular production unit, which is expected to boost production capacity by 100,000 tonnes in 2014. 

“UMS, meanwhile, remains a key focus area for improvement, as we explore ways to regain full use of the Samut Sakhon facility as well as solutions to increase the value of our 0-5 mm coal inventory,” Chalermchai said.

He said that the 2013 results were most significantly hit by very weak freight rates due to the prolonged downturn in the dry bulk shipping industry. “This situation forced us to take a substantial impairment against the fleet in order to bring its asset values in line with their fair market value. 

“The focus over the last two years has been to work on our fundamentals, and in 2014, we enter a new phase in which we begin to capitalise on all of this important groundwork,” he added.

TTA generated consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) of Bt1.79 billion, despite the historically low freight rates in the dry bulk shipping industry and higher selling, general and administrative costs associated with initiating Mermaid’s full sub-sea-services contracts.