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Fitch affirms 'A+(tha)' rating with "Stable Outlook" for GPSC, following GLOW acquisition that reflect the company's strength with Rights Offering during Sept 30-Oct 4, 2019 as planned.

Fitch Ratings has affirmed GPSC at ‘A+(tha)’ following GLOW acquisition which is due to bring in increasing revenue.

Mr. Chawalit Tippawanich, President and Chief Executive Officer of Global Power Synergy Public Company Limited or GPSC, the innovative power flagship of PTT Group, said Fitch Ratings (Thailand) has affirmed rating credit of ‘A+(tha)’ for GPSC and its senior unsecured bond. The credit rating granting this time has reassessed the linkages between GPSC and its parent company, PTT (which is granted ‘AAA (tha)’ with Stable Outlook’) that is committed to provide support to GPSC to acquire GLOW.

Fitch said it affirmed the ‘A+(tha)’ for GPSC due to the acquisition of GLOW and its investment in Energy Recovery Unit (ERU), which is expected to bring in strengthening business in terms of increasing assets as well as increasing capacity from 4% to 10% for the proportion of country capacity at the end of Q2/2019.

Moreover, Fitch has also assessed the quality of GPSC’s increasing revenue, which is expected to remain strong after the acquisition of GLOW, which has secured several contracts to sell power to major clients, including PTT Group and the Electricity Generating Authority of Thailand (EGAT). The contracts will help absorb uncertainties of other power and steam selling contracts, which also specify that clients must buy at the minimum capacity rate. Regarding Small Power Producer Plants (SPP), which are due to expired during 2022-2023, the Energy Policy and Planning Office of the Ministry of Energy has approved in January 2019 to allow the extension of expired power purchasing contracts, allowing buyers to buy at smaller amount of power in order to help reduce risks.

“Fitch also expected that GPSC would have increasing operating cash flow of Bt.14-15 Billion within the next 3 years with better EBITDA Margin due to the synergy of GPSC and GLOW, which will bring in best benefit and the strength of cash flow that will increase investors’ confidence among the existing shareholders of GPSC in the long term,” said Mr. Chawalit.

Moreover, the GPSC still goes on with the plan to increase capital by Rights Offering at the rate of 1 existing ordinary share to 0.8819 newly-issued ordinary share at the offering price of Bt.56 per share. In the case of a fraction of a share, the fraction shall be rounded down. The Record Date was on September 4, 2019 and the date for subscription of newly-issued ordinary shares shall be during September 30 and October 1-4, 2019.

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