Sawasdi says goodbye to Hemaraj
Property developer Sawasdi Horrungruang has decided to part ways with Hemaraj Land and Development, the company he founded and struggled with after the 1997 financial crisis, by selling the family's 15-per-cent stake for Bt6.55 billion to WHA.
“I want to retire,” he was quoted yesterday as saying by Somyos Anantaprayoon, president and chief executive officer of WHA, a factory and warehouse developer.
“The negotiations continued for quite some time. Khun Sawasdi considered us able to proceed with what he has built up and he wants to retire,” Somyos said.
WHA is acquiring at least half of Hemaraj for at least Bt22 billion with the intent to gain majority control over the company, whose network spans eight industrial estates in Thailand.
Sawasdi earned himself unforgettable fame after his business empire - also consisting a steel business - folded under massive debt after the financial crisis. He told creditors then that he would neither flee nor default, but he did not have any money to repay debts either.
A series of painful debt restructurings followed, with Sawasdi being involved in the process. Many pieces of his family’s business empire were jettisoned to keep Hemaraj afloat. Today, he is the company’s executive chairman.
WHA will acquire 2.18 billion shares or 22.53 per cent from major shareholders, which are, besides Sawasdi, foreign institutional investors, at the price of Bt4.50. It will also tender for the remaining shares at the same price, with the aim to control at least 50 per cent of the industrial-estate company.
This deal is expected to close in late March.
WHA is ready to keep the positions available for those Hemaraj executives wanting to stay on.
WHA plans to raise Bt8.8 billion via the offering of its shares to existing shareholders and Bt14 billion in borrowings from Siam Commercial Bank.
The bank loans will raise WHA’s debt-to-equity ratio briefly before it falls back to 1.5-1.7 times after the capital increase via the share sale. The capital-mobilisation plan of WHA will dilute shareholders’ stakes by about 25 per cent.
The company projects revenue and profit more than doubling and its market capitalisation exceeding Bt80 billion. WHA has no plan at this time to delist Hemaraj, as it wants to wait to see the results of the tender offer.
The Bt4.50 price is 10 times Hemaraj’s prospective earnings. Somyos believes the price is reasonable compared with the 15-20 price-to-earnings ratios of other companies in the same industry.
WHA expects a boost in revenue and profit after the acquisition. In the first nine months of this year, Hemaraj earned Bt2.5 billion on revenue of Bt6.7 billion, while WHA’s net profit and revenue stood at Bt173.95 million and Bt2.4 billion.
