SET-listed Energy Earth Plc (EARTH), a coal trader, has defaulted on a 90-million-baht debt, and it is still unclear how the company would pay the hundreds of millions of baht in further debt due next month.
Managing director Thanawat Pratoomsuwan said the company had offered 40 million baht in bills of exchange (B/Es) on March 6, 2017 to be its working capital. The amount has been invested by an unnamed financial institute.
The B/Es were due on June 6, but the company had informed the Stock Exchange of Thailand that it failed to pay the debt on time because of tight cash flow. Meanwhile, the company is still in talks with the financial institute to review its cash flow situation.
Mr Thanawat said the company also failed to repay another lot of B/E debt worth 50 million baht due on June 8, 2017.
"To rectify the cash flow problem, the company is now negotiating with the financial institute and we hope to be able to renew our credit facility by August 2017 and repay the due bills of exchange soon," he said.
In the event of a default, the company has the obligation to repay default interest at 7.5% per year. However, such defaults do not permit other creditors to call a default on other liabilities to become immediately due and payable.
Apart from the 90-million-baht default, the company is also due to pay B/E debt worth total a of 470 million baht by July. So far, there has been no announcement from Energy Earth on how it would manage to pay the looming debt on time.
The company is seeking loans to help ease its tight cash flow in order to be able to repay all its debts later.
"The company will temporarily have a very tight cash flow," Mr Thanawat said. "Once we have clarified the loans issue with the commercial institute, we will be able to repay the B/Es. Currently, the company is still operating normally."
Energy Earth had doubled its revenue in the first quarter this year to 7.9 billion baht, compared with 4.1 billion baht in the same period last year, largely because of a rising demand for coal both in domestic and overseas markets.
But the company posted a net loss of 69 million baht in the first quarter, compared with a net profit of 112 million baht a year earlier, because of a surge in sales and operating costs, which jumped 116% to 7 billion baht in the first quarter of 2017 from 3.8 billion baht in the prior-year period.
The company also had a 341-million-baht loss owing to exchange rate fluctuations in the first quarter of this year.
EARTH shares closed yesterday on the SET at 1.45 baht, down 61 satang, in heavy trade worth 3.51 billion baht.