Thoresen Thai Agencies plans to raise more than BT6 billion
Thoresen Thai Agencies yesterday announced plans for a capitai increase to raise up to Bt6.37 billion over a 30-month period through a rights offering (RO) and the issuance of stock warrants.
TTA expects to raise up to Bt3.96 billion in immediate funds from the RO, and up to Bt2.4 bil¬ lion over the next two and a half years from the exercise of warrants, for a combined total of up to Bt6.37 billion.
The key uses of the new capital include Thoresen Shipping's fleet-expansion pian through the purchase of new and second¬ hand vessels and potential re¬ newal of the drilling-rig fleet at Mermaid Maritime, a TTA sub¬sidiary providing offshore oil and gas services.
All shareholders will be entitled to exercise their rights by subscrib¬ing to two newly issued shares at a price ofBt14 per share for every five existing shares they own. Free war¬rants will be issued only to those shareholders who subscribe for new shares at a ratio of one warrant to two newly subscribed shares.
Each warrant can be converted into one common share at an exercise price of Bt17 within 30 months of the warrant issuance. The subscription period for the RO is February 2I-28.
Unsubscribed shares will be allocated to shareholders who sub¬scribe to excess rights at the same price ofBt14 per share and up to a limit of 0.5 time their current hold¬ings. Any remaining shares after the distribution of excess rights may be allocated to a private place¬ment in one or several tranches.
The capital-increase proposal is subject to shareholder approval at TTA's annual general meeting of shareholders, which will be held on January 30.
The company's president and chief executive officer, ML Chandchutha Chandratat, said funds raised via the RO would be allocated towards its strategic investment priorities, namely dry bulk shipping and offshore oil and gas services.
Meanwhile, capital raised through warrants will likely come over the course of the next two and a half years, allowing TTA to fund the completion of new-build assets that can be locked in at relatively lower prices by ordering now, as the majority of payments are typically due upon completion.
The company vows to use a com¬bination of equity and debt to fund its asset purchases, balancing its loan covenants with its growth objectives.
In 2008, a five-year-old Supra¬ max vessel traded above US$70 million, while the average price over the past 10 years has stood at around $30 million. TTAsays there are opportunities to pick up high¬ quality, modern, efficient second¬ hand vessels for Iess than $20 mil¬ lion (Bt6I3 million).
Likewise for new-build Supra¬max vessels, the price now stands at between $24 million and $27 million, roughly 20 per cent cheap¬er than the average price of a new¬ build over the past IO years.
As freight rates remain low during the next IO-I2 months, asset prices are expected to decrease even further and bottom out in 20I3 before a gradual pick-up in 2014.
The offshore oil and gas servic¬es sector has entered a cyclical upturn, with utilisation rates for modern tender drilling and jack¬ up rigs reaching approximately 95 per cent. To maintain its ability to participate in this segment, Mermaid may decide to renew its asset base. lts two main drilling assets are approaching the end of their useful lives, and there are no realistic second-hand purchase opportunities. A new-build tender drilling rig can be constructed for $I20 million to $I30 milFon, with delivery approximately two years thereafter.