Embattled Energy Absolute (EA) is seeking a strategic partner to help it with debts of 19.5 billion baht due this year, after a credit downgrading caused the SET-listed renewable energy company difficulty in mobilising fresh funds via bond issuance.
The company is in the process of negotiating and considering the selection of strategic partners to boost financial strength, repay debts and develop a sustainable business in the long term, director Wutthilerd Chiannilkulchai said in a filing to the Stock Exchange of Thailand (SET) on Tuesday.
EA also intends to roll over short-term loans and repay long-term loans and debentures maturing in 2024 with cash flow from operations, of which roughly 1 billion baht is generated monthly from solar and wind plants.
According to the SET, EA’s loans from financial institutions and debentures totalled 62.2 billion baht, representing 89% of total debt, with short-term debt totalling roughly 19.5 billion baht.
The loan limit from financial institutions is roughly 6 billion baht, and this is in the final stage of consideration by financial institutions.
Additional debentures are to be issued in 2024, the number and offering dates of which are under negotiation with the underwriters, with the company expecting these to be one to three-year debentures, said Mr Wutthilerd.
EA heard from Tris Rating that the company has been downgraded from BBB+ (negative) to BB+ (negative), which may affect the loan limit from financial institutions and new debentures to be issued as originally planned, he added.
The new rating reflects “heightened liquidity risks the company is likely to face in the near term and the corporate governance issue following the accusation” by the Security and Exchange Commission (SEC), the credit rating company said in a separate statement.
The regulator late on Friday alleged EA’s founder and former chief executive, Somphote Ahunai, his deputy, Amorn Sapthaweekul, and a third person made procurements leading them to receive benefits worth 3.5 billion baht. The individuals named have denied the allegations.
Meanwhile, EA’s share prices plunged nearly 30% in morning trade on Tuesday after the SET lifted an SP (suspension) sign following an explanation from the company about its financial situation and the impact of the fraud probe.
Shares were suspended on Monday when the company announced changes to its board of directors and senior management.
Executives told a press briefing on Monday that the company will proceed with plans to sell as much as 5.5 billion baht of green bonds on July 23-25.
UOB Kay Hian ended its coverage of EA, warning that the company’s ongoing and future projects could face delays, while the fraud allegations will likely have “severe repercussions for the company’s ability to issue bonds and manage debt repayment”.
Korakot Sawetkruttamat, vice-president of Kasikorn Securities (KS), said EA’s latest developments have prompted concerns over both direct and indirect impacts on banking stocks.
Banks may need to set aside higher provisions for non-performing loans. Meanwhile, if EA cannot raise funds through bond issuance, they will have to borrow more money from banks.
According to KS, EA has bank loans of 31 billion baht and the banks may have to start setting aside for the amount in the third quarter if the company is unable to repay the debt.
Siam Commercial Bank (SCB) is the major creditor of EA while others include TMB Thanachart Bank (TTB), the Export-Import Bank of Thailand and Japan International Cooperation Agency.
According to Mr Korakot, TTB said of the total amount loaned to EA, the majority has been repaid with only hundreds of millions of baht’s worth of short-term loans due to be repaid.
“From the total 31 billion baht liability of EA, 8 billion baht is a real concern because these are short-term loans,” he said.
SCB’s stock price continued to slide on Tuesday, dropping 0.49% by midday to 102.5 baht, after a 3.29% drop on Monday. TTB rebounded by 0.56% after losing 2.21% a day earlier.
EA finished at 9.20 baht and Beyond Securities (BYD), which is a part of the EA group, fell 9.6% to 1.13 baht, while Next Point (NEX) was down 5.56% to 1.02 baht, following a 29.8% decline on Monday.
