A new Skytrain operator emerges from bankruptcy court
after 10 years

By Jon Fernquest

Bangkok Mass Transit System (BTSC), operator of the Bangkok Skytrain (BTS), completed a debt restructuring programme this week that will give the company a new lease on life.

The BTS debt restructuring case has been tied up in bankruptcy court for almost 10 years and has been surrounded by continual controversy.

The details of the case have always been murky with dissatisfied parties pressing their claims in a steady barrage of lawsuits (Read article on one such conflict).

BTS and the Skytrain project were singled out last year as a contract "where the interest of state or that of the public was not upheld" in an op-ed piece by Democrat Party leader Abhisit Vejjajiva (Bangkok Post, op-ed section, 06-04-2007, link).

The stakes in the new company seem to be distributed as follows:

New funding, a new business partner

The key element made the debt restructuring possible was the entry of a new "strategic partner," a consortium of new investors who received a 38.5% stake in the company in exchange for injecting a large amount of new funds into the company.

The consortium includes two companies: Ashmore Investment Management (UK) and Noonbays Asset Management (Singapore?, US?).

These new investors were given priority over a foreign investor who already had a sizeable stake in the company, the Hong Kong-based New World Group owned by Cheng Tu Tung which had its stake reduced from 20% to 2.67%.

Reduced liabilities, extended repayment plan

In the debt restructuring the company has reduced its debts to from 67.7 billion to 10 billion baht. 

This remaining debt will be repaid over eight years to the three remaining creditors: Deutsche Bank, Thai Asset Management and Thanachart Bank

Debt worth 16.34 billion was converted to a creditor equity stake in the company, apparently a 5.18% stake. (The size of the equity stake is not stated directly but can be inferred since all stakes must add up  to 100%, see chart above).

The new investor consortium and Siam Rail together have "committed 12 billion baht to partially clear debts."

The company's registered capital fell from 18 billion baht to 15.89 billion baht.

Where will revenue to sustain the new company come from?

Emerging from bankruptcy court BTS now looks like a viable company that can turn a profit and survive. The daily operatring picture for BTS runs as follows:

9 million baht - Revenue
3 million baht - Operating expenses
1 million baht - Interest expenses
--------------
5 million baht - Net

This looks promising. Before interest expenses ran 8 million baht per day which made profitable operation almost impossible.

For the fiscal year 2008 the operating profit is projected to be 22 billion baht and earnings before interest, taxes, depreciation and amortisation to be 2.5 billion baht.

BTS plans to diversity its revenue stream by adding new types of businesses to the company in the near future.

Property development along train routes will be pursued in joint ventures with other companies.
The maximum BTS stake will be 50%. This new business will likely use about 5 billion baht of the
7 billion baht in cash available after the debt restructuring.

Investment in public train development in two neighboring countries is also on the drawing board.

An investment in the Green Line extension of the Skytrain is also in the making.

(Source: Bangkok Post, business, front page, NAREERAT WIRIYAPONG, 30-10-08, link)

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Vocabulary:

Bangkok Skytrain - the elevated light rail public transportation system in Bangkok, Thailand, operated by Bangkok Mass Transit System Public Company Limited (BTSC) under a concession granted by the Bangkok Metropolitan Administration (BMA), with 23 stations along 2 lines, it was opened on December 5, 1999 (See Wikipedia)
debt restructuring - arrangements of a borrower with lender rescheduling debt repayments or refinancing the borrower can remain in business
a new lease on life - a second chance for success after suffereing many problems and setbacks

bankruptcy - when a company does not have enough money to pay their debts and continue in business (See Wikipedia)
controversy - a lot of argument and disagreement over something
surrounded by continual controversy - has always been accompanied by disagreement and argument

murky - not clear what is going on (probably something bad)
dissatisfied - not satisfied, not happy because you did not get what you needed or wanted
pressing their claims - trying hard to get what they say (claim) they should get

a barrage - continuous firing on an area with large guns, continuous aggressive action
a barrage of lawsuits - continuous aggressive lawsuits
singled out - select one from among many

an interest  - a person or organisation that will benefit or be hurt in some way by a decision
the interest of the state - whether the state will benefit or be hurt by events
the public interest -  for the benefit of everyone in society, the general welfare, the common well-being (See Wikipedia)
the public interest not upheld - the benefit of the state was not supported (in actions or decision)
uphold X - support and maintain X

a stake in X- owning part of X
inference - a conclusion from applying logic to information that you already have

a consortium - a group of people who have agreed to cooperate with each other
clear debts - pay back money that you owe to someone
committed X to clear debts - set aside amount X to pay back money that you owe someone

registered capital - the maximum amount of money that a company is allowed to raise by selling shares 
viable - capable of continued existence, capable of doing what it is supposed to do

operating profit - the revenue of normal business activities during a period less costs
earnings before interest, taxes, depreciation and amortisation (EBITDA) - used to evaluate the profitability of a business,

EBITDA = Operating Revenue – Operating Expenses + Other Revenue

Its name comes from the fact that Operating Expenses do not include interest, taxes, or amortization.

(See Wikipedia)

on the drawing board - being planned
in the making - being created or made now, will happen soon

Posted by Jon Fernquest at 06:33 PM | Permalink | Comments (0)