In the News: 2003

CPN Secures New Capital For 8 Billion Baht World Trade Project

Bangkok Post
22 May 2003

Central Pattana Plc's eight-billion baht plan to turn the World Trade Center at the Ratchaprasong intersection into an upscale shopping centre took a step forward yesterday after the company announced a capital increase of one billion baht.

New convertible preferred shares would be issued by Central Pattana (CPN) to the Thailand Equity Fund. The share issue plan is expected to be approved at the annual general meeting of CPN shareholders on June 26.

After the transaction is completed, the Thailand Equity Fund will own approximately 8.2% in CPN, reducing the Chirathivat family's holdings in CPN to 60% from 66% at present.

Naris Cheyklin, CPN's chief financial officer, said the fund would nominate one director to the company's board.

In addition, the Thailand Equity Fund will use its global and local network to help source potential business partners for CPN while also assisting the firm in future capital mobilisation.

CPN will issue 35.7 million preferred shares to the fund at 28 baht each. The shares, which have a par value of five baht each, will carry voting and dividend rights similar to common shares and are convertible to common shares on a 1:1 basis.

CPN shares declined 25 satang yesterday to close at 27.25 baht, in trade worth 4.61 million baht.

The fund would be able to convert the preferred shares at any time, and would be called on to do so whenever CPN's shares traded above 34 baht.

CPN president Kobchai Chirathivat said the company would use the funds to improve the World Trade Centre, which would be renamed Central World Plaza. Renovation work, both exterior and interior, will start in July.

The overall development plan calls for 193,700 square metres of retail plaza space, a 46-storey office block with 88,900 square metres of space and a 400-room, four- or five-star hotel.

Mr Kobchai said the company was currently negotiating with local and international investors to develop the hotel.

He said the renaming of the complex would take place in the next two months. Pote P. Videt, managing director of Private Equity (Thailand) Co., said the Thailand Equity Fund decided to invest in CPN because it was long-established as a dominant player in the retail market.

``More interestingly, we could utilise and draw international ideas and techniques to implement in Thailand. Although there are other retail projects established in nearby areas, the World Trade Center would not compete directly with them,'' said Mr Pote.

Consequently, he said, the fund would obtain an attractive return on investment in CPN.

Mr Pote said CPN was the second business in which the fund had invested in after the local securities brokerage Trinity Watana, which involved an investment of 100 million baht.

With 10 billion baht in capital, the fund planned to invest in another two projects this year, he said.

Mr Naris said the total budget for developing the World Trade Center was eight billion baht. About four billion baht had already been spent to acquire the project from the former operator, Wang Petchaboon.

Funds for the project will come from the capital increase and a property fund. CPN expects to break even on its investment in the project within eight to nine years.