Banpu founder steps down as CEO

Amid a severe downturn in the global coal business, Chanin told a press conference yesterday that he would step down from the position he has held since establishing the firm 31 years ago, and hand over the CEO post to chief financial officer Somruedee Chaimongkol on April 10.

Peter Parry, currently CFO of Centennial Coal, the Australia-based coal-mining firm Banpu acquired in 2010, will succeed Somruedee as the finance boss for the group.

Chanin said Banpu would split off Banpu Power, the holding company for its power-generating business, for the launch of an initial public offering on the Stock Exchange of Thailand late this year or in early 2016.

"We believe we can unleash more values of our power business [from floating its shares on the SET], and raise funding from the capital market to enable it to grow faster," he said.

Somruedee said Banpu would keep more than half of its shares in Banpu Power after the IPO, and expected no decrease in net cash flow generated from the subsidiary because its reduced shareholding would be offset by a higher profitability ratio of the power business.

Since coal prices have been trending downwards for a few years, Banpu has announced a plan to increase the contribution from its power-generating business. Chanin said the company had seen a good opportunity to expand its power business further in the Asia-Pacific region, including plants fuelled by coal and by renewable sources such as hydro, solar, biomass and wind.

Banpu Power’s major assets include stakes in coal-fired power plants in Thailand (BLCP), Laos (Hongsa), Banpu Investment (China) or BIC, and Indonesia (Indo Tambangraya). The Hongsa project in Laos and the Shangxi Luguang project in China are expected to add 2,000 megawatts to Banpu’s output by the end of 2017.

The power business currently contributes about 35-40 per cent of Banpu’s earnings before interest, taxes, depreciation and amortisation (EBITDA), which totals between US$650 million and $700 million (Bt21 billion to Bt23 billion) yearly, while the balance is from its coal business.

In line with the commissioning of its Hongsa Power Plant generating units, Banpu will have to contribute $149 million this year and another $192 million next year in equity financing to support the project.

Somruedee said that after Banpu Power’s IPO, the parent company would be left with its coal business and would still have a controlling interest of more than 50 per cent in the power subsidiary.

"There is no SET rule prohibiting this. And it is not a divestiture of assets [from the parent firm]. It’s only a capital increase at the subsidiary company. There will be no conflict of interest. There will be a clear-cut separation of the power business" from the parent company, she said.

Banpu’s board of directors will be expanded to 13 members, after taking on Somruedee as the first female director and CEO of the company since it was founded by Chanin in 1983. Parry will also become the first foreigner in the CFO post.

Chanin said he would stay on the board and could advise and provide guidance to the company on some matters to ensure continuity.