Private funds may be used to buy WEH

Listed on the Market for Alternate Investment, Demco, which has a 4-per-cent stake in WEH, was previously affected by reports that WEH’s biggest shareholder – Nopporn Suppipat – had fled the country after being charged with a series of criminal offences related to loan sharks. Demco’s share price plummeted for days in a row in late December last year.

Nopporn, who owns a 75-per-cent stake in Renewable Energy Corp, which holds 63 per cent of WEH, was one of three directors among eight authorised to sign WEH’s business transactions.

“At the WEH shareholders’ extraordinary general meeting on January 21, the shareholders agreed to relieve Nopporn from the post of chairman and director in order to unlock its business transactions,” Paitoon Gumchai, chief financial officer of Demco, said recently.

He added, “The shareholders also agreed to allow private funds to buy all WEH shares held by Nopporn, but there are still legal concerns about the deal.”

Negotiations on the legal issue and due diligence are expected to take two to three months, said Paitoon.

Among the two items on the agenda for the meeting were shareholders’ concerns about Nopporn’s chairmanship of WEH and his role as a major shareholder in influencing WEH’s decision-making. The shareholders discussed how to end the deadlock with Nopporn still absconding.

Paitoon said many local and international private funds had expressed interest in buying WEH’s shares as they saw the firm’s future value to be worth Bt10 billion in cash flow annually for the next 20 years. 

 

Combined generation power

WEH now has 12 wind-power projects with a combined generation power of 930 megawatts. Of that, construction has already been completed on two projects and they are supplying electricity to the system, two are under construction and four were granted power-purchase agreements. Paitoon said that if the new investors were not comfortable with buying WEH shares from Nopporn, they would be approached to buy newly issued shares of WEH via private placement instead and that would dilute Nopporn’s holdings in WEH.

“However, WEH’s executives are trying to push for the first option,” said Paitoon, adding the result of the negotiation would depend on banks that had extended loans to finance as much as 70 per cent of each project’s value. As for Demco, he said it would prefer exiting from WEH. If WEH could list on the stock market successfully, Demco would enjoy three times capital gains. Demco as a shareholder of WEH was affected slightly by WEH’s business disruption on equity and construction contracts, Paitoon said. It might lose possible returns in the form of dividends worth Bt140 million from the four projects, which were expected to be realised in 2017 and 2018. A Bt600-million pending construction contract for a wind-power project of WEH might also be delayed by six months. In addition, he said, Demco was trying to seek more revenue in neighbouring countries such as Laos.

Next week, it would sign a primary agreement worth Bt1 billion with a Laotian authority to produce and supply tap water to it, covering the Luang Prabang Municipality area. By March, he said Demco would also sign a memorandum of understanding with a Laotian agency for construction of underground power distribution lines in Luang Prabang. 

“The two projects will help pave the way for hydropower plant projects from small dams in Laos in the next three years, in line with the Laotian government’s policy to build hydropower plants from over 160 small dams,” said Paitoon.