True Corp plans rights offering

The move is also seen as an attempt to secure bank loans to pay the first instalment of the upfront fee for the licence it obtained recently on the 900-megahertz spectrum and to provide a bank guarantee for the remaining instalments.

True and Jasmine International (JAS) each won a 900MHz licence in December with hefty bids of Bt76.298 billion and Bt75.654 billion respectively. Both have yet to pay the first instalment of Bt8.040 billion and provide bank guarantees for the remaining amount.

They have to fulfil these conditions by March 21 in order to get the licences from the National Broadcasting and Telecommunica-tions Commission (NBTC).

True’s chief financial officer Noppadol Dejudom said “our comprehensive financing package is almost complete, we are ready to pay NBTC.

We just need to get a written confirmation from NBTC on the process in case JAS does not pay and its lot 1 reauctioned in order to ensure that our cost of 900 MHz will be very competitive no matter what. Then we will pay.”

True’s board on Friday reached a consensus to propose to shareholders at its annual general meeting that it increase the company’s registered capital by Bt60 billion from the existing amount of more Bt98 billion by offering 15 billion ordinary shares, at the par value of Bt4 per share, and to allocate subscription rights to existing shareholders in proportion to their respective shareholdings (rights offering). 

Shareholders are to consider the issue at the AGM scheduled for April 8. The board did not set a fixed offering price but defined a method of calculating it, which is 0.9 multiplied by the weighted average price of the company’s shares in the stock market from March 3 to 30, 2016. 

The company will announce the price through the Stock Exchange of Thailand on March 31.

True’s share price ended yesterday at Bt6.60, down 7.04 per cent from Friday’s close. A telecom analyst believes that the creditors require True to increase its capital in order to secure loans to pay for the 900MHz spectrum licence. This has negative implications for JAS, as the banks might impose the same recapitalisation requirement on that company.

The analyst added that if JAS fails to meet the deadline for the first instalment of the licence fee, he believes True will hold off on its payment and renegotiate the licence price with the NBTC. If that happens, True is likely to put the rights issue on hold. The analyst said that if JAS fails to meet the deadline, the most likely scenario is the re-auctioning of the 900MHz spectrum.

NBTC secretary-general Takorn Tantasith said yesterday that it was highly unlikely that either 900MHz licence winner would fail to pay the first instalment and provide a bank guarantee. But if they failed to do so, they would have to be responsible for all possible impacts and might risk losing their current status as NBTC licence holders. Their reputation would also be damaged.

True chief executive officer Supachai Chearavanont said that after the new funds are raised, True would be able to maintain a net debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio of no greater than 2:1 to reflect its strong financial position and to maintain its investment-grade credit rating comfortably.

The company plans to spend the proceeds from the capital increase to repay loans obtained from financial institutions.