Thoresen Thai Agencies Plc will continue to pursue acquisitions over the next two years, says M.L. Chandchutha Chandratat, managing director of the country’s largest dry bulk carrier.

The aim is to balance its three core businesses of transport, energy and infrastructure, he said.

Shipping accounts for 65% to 70% of TTA’s total revenue, with energy
contributing 25% and transport the rest. M.L. Chandchutha said the
company hoped to achieve a balance among the three operations by 2013.

The company is in negotiations to acquire additional overseas assets, with four or five deals ongoing, he said.

M.L. Chandchutha said the energy and infrastructure businesses had high
growth potential next year compared with shipping, in terms of
profitability. While these two businesses will contribute more income
next year, growth in shipping would decelerate due to plentiful supply
and sluggish demand.

“We have completed the three acquisition deals on target in this year
and the company will further search for new opportunities. Strong
cashflow and a low debt-to-equity (D/E) ratio will support the asset
buys,” he said.

The company has more than 6 billion baht in cash on hand, with its D/E
ratio low at 0.2 times, which could still be financially supported at
1.5 times. As a result, the company has more room to use debt to
facilitate business expansion.

TTA yesterday signed syndicated loan agreements worth a combined $200
million (about 7 billion baht) with four financial institutions.
Kasikornbank, the mandated lead arranger, will provide $100 million in
financing, Krung Thai Bank $50 million and the Export-Import Bank of
Thailand and Mizuho Bank $25 million each.

The loans will fund business expansions over the next two years
including asset acquisitions. For this year, TTA completed three
acquisitions including two takeovers, Unique Mining Services, a local
coal importer, and Baconco, a fertiliser manufacturer and distributor
in Vietnam. Merton Group, which owns coal mines in the Philippines, was
also acquired.

Both organic growth and acquisitions would be used for business expansion in 2010, M.L. Chandchutha said.

TTA reported profits of 352.62 million baht for the period to June 30,
third quarter of its financial year, down from profits of 2.04 billion
in the same period last year. Operating revenues totalled 4.9 billion
baht for the third quarter, with operating profits of 687 million,
compared with operating losses of 32.7 million for the three months
ending on March 31.

Nine-month profit for the period to June 30 was 1.348 billion baht,
compared with a profit of 6.72 billion in the same period last year.

Shares of TTA closed yesterday on the Stock Exchange of Thailand unchanged at 29 baht in trade worth 426 million baht.

Source: Bangkok Post

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