In the News: 2003

Central to sell 8.2% new shares to fund expansions

Thai News Service
23 May 2003


Central Pattana (CPN), the country's leading shopping mall developer, said it will sell about 35 million new shares, or about 8.2 percent of the enlarged shares, to Thai Equity Fund to raise fund for its expansion projects, including the renovation and development of Bangkok's leading shopping mall, World Trade Center.

The company said in a report to the Stock Exchange of Thailand that it plans to sell the shares at 28 baht apiece to the fund, which has been set up by the government a few year ago to local companies in need of investment or rehabilitation.

CPN is the leading developer and operator of shopping centers in Thailand, operating a network of nine "Central Plaza" shopping centers throughout the country.

In the past six months, CPN launched two new projects; the Central Plaza Rama II in Bangkok and the Chiangmai Airport Plaza Phase II.

It also acquired the distressed World Trade Center for 10 billion baht, which is located in the heart of Bangkok's central business district.

"These recent moves not only enlarged the size of the company, but also strengthened CPN's market position as the dominant leader in the industry," the company said.

As the sole multi-mall operator actively managing its tenant mix and leases portfolios, the company is well positioned to directly benefit from Thailand's overall economic recovery and increase in consumer spending.

Chanpen Sirithanarattanakul, an analyst at DBS Vicker Ballas, said the share sale will benefit the company and help with its World Trade Center project, which will substitute for income lost from the Central Ladprao mall, whose contract with the State Railways of Thailand will expire in 2008.

"The dilution effect on share prices will likely be balanced by its business growth potential," Chanpen said. "The move was good for the company in the long run." Sombat Ekwan, an analyst at Ayudhya Securities, said he continues to recommend buying CPN shares as the company has been able to seek financing from its share sale, instead of borrowing from banks, which adds to its interest-related costs.

"The impact from the share sale is minimal," he said. "The investment in the (World Trade Center) project and other plans to set up a property fund require a lot of investment." The Thailand Equity Fund, a 10 billion baht special purpose mutual fund, was launched with the participation of the Thai government to make private equity investments in operationally competitive Thai businesses.

It is managed by MFC Asset Management Public Company Limited, with technical assistance provided by Private Equity (Thailand), an affiliate of Lombard Investments.

Thailand Equity Fund's investors are composed of leading international and Thai institutions. International institutions include the International Finance Corporation, the California Public Employees Retirement System (Calpers), the Asian Development Bank, and DEG (a member of Germany's KfW Group).

The Thai investors are the ministry of finance, all 12 Thai commercial banks, the Industrial Finance Corporation of Thailand, the government pension fund, and the Government Savings Bank.

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 its future capital market activities. The transaction is expected to be approved by company shareholders on June 26, 2003.