Ch Karnchang earmarks Bt10 bn for merger of metro, expressway operators
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CH KARNCHANG, a leading construction company, has budgeted Bt10 billion to facilitate the merger of two affiliates - Bangkok Metro and Bangkok Expressway.
“We have to buy 10 per cent in BMCL from BECL before the merger because of the Limited Public Company Act. When companies want to merge, they cannot have cross-holdings of shares, so we have to buy BMCL shares from BECL,” Plew Trivisvavet, president and chief executive officer, told a press conference yesterday.
BECL holds 10 per cent of BMCL.
Ch Karnchang also stands ready to buy shares from others who hold shares in BMCL and BECL but are against the deal and do not want to hold shares in the new company resulting from the merger.
This also complies with the Limited Public Company Act.
Before the merger, Bangkok Metro has to clear its retained loss of Bt13.1 billion. That means the new company will show a profit immediately, which is good news for BMCL’s shareholders.
BECL also will benefit from expanding its business from expressways to railways now that the government has embarked on a Bt1.3-trillion project to build railroads nationwide.
“This is win-win situation for both companies,” Plew said.
The capital expenditure budget will be financed from internal cash flow, issuing debentures worth Bt4 billion next month, borrowing from banks and the sale of Ch Karnchang’s 30-per-cent stake in Xayaburi Power Co, the operator of a hydropower plant in Laos, to its subsidiary CK Power for Bt4.34 billion in the first half of this year.
Some of the proceeds will be used for the merger and the rest for investment this year.
CK Power’s board also resolved to increase its capital by 1.87 billion share units and the offered price of Bt3 per share for a total of Bt5.61 billion and issue warrants worth Bt11.6 billion early this year. The company will propose this for shareholders’ approval in April.
About Bt4.34 billion will be used to buy the stake in Xayaburi Power Co and the remaining Bt1.26 billion to supplement cash flow and invest in other projects this year and next, managing director Supamas Trivisvavet said.
Plew said this move was part of the group’s restructuring to focus on two core businesses – construction, led by Ch Karnchang, that generated about 90 per cent of the group’s revenue, and infrastructure.
Infrastructure will be through three companies – the merged entity, CK Power, which focuses on alternative energy in Asean, and TTW, which focuses on water-supply systems.
After restructuring, Ch Karnchang targets total revenue of at least Bt34 billion this year, nearly the same as last year. It has a Bt100-billion backlog of projects under construction.
Its net profit should show strong growth thanks to the restructuring.
Ch Karnchang targeted revenue of Bt34 billion and a net profit margin of 6-8 per cent for last year.
This year, the company expects to win about 25 per cent of the bids for the government’s infrastructure projects, including rail.
It plans to expand in Asean including Laos and Myanmar; the latter’s government has a policy to develop the country’s infrastructure. The group is studying infrastructure projects such as an alternative-energy power plant, roads, railroads and expressways in Myanmar. Ch Karnchang and TTW are jointly studying a water-supply project in Mo Lumyai city, Myanmar.
