CP Group injects B3 billion in new funding into True Move

Bangkok Post (15 December 2007)

The CP Group will provide a three-billion-baht capital injection into the third-ranked cellular provider True Move.

The financing would come from Bitco, the holding company parent of True Move, through a rights offering of six billion shares at 0.50 baht each to CP.

Bitco is currently controlled by True Corp, the CP Group and Wirefree Services Belgium, a subsidiary of France Telecom.

True Corp would have the right to repurchase the Bitco shares on a cost-plus basis at any time over the next 18 months. Pricing for the buy-back clause is 0.53 baht per share if purchased within the first six months, 0.56 baht if exercised within six and 12 months and 0.59 baht if exercised between 12 and 18 months.

The share offering would increase CP's stake in Bitco to 23.92% from 0.76%, while True's holding would be diluted to 75.26% from 98.17%.

True Corp vice-chairman Athueck Asvanund said the capital injection would help relieve liquidity pressures for True Move. He said various options had been explored to ease working capital difficulties, including having the company take on additional loans.

But any additional borrowing would have to secure approval from existing creditors, a process complicated by the holiday season.

True Corp chief executive Supachai Chearavanont said the company would definitely exercise its right to buy back the Bitco shares from CP.

He said the financing would allow True Move to continue with its network and market expansion.

''True Corp is delighted that CP Group continues to show its long-term commitment to True Corp, and its confidence in the growth potential of True Move and the Thai mobile industry,'' Mr Supachai said.

True Move reported 11.2 million subscribers as of Sept 30 with 2.1 million new additions in the third quarter. The company had a market share of 22.7% at the end of the quarter, with a full-year market share target of 33%.

Mr Supachai said True Move was ''nearly cash flow positive'', and that the company's network covered 92% of the population.

True Move reported nine-month net losses of 1.15 billion baht, down from losses of 1.78 billion the same period last year. But the company reported a third quarter profit of 936.3 million baht, compared with losses of 760.5 million last year. Service revenues, including interconnection charges, were 8.4 billion baht in the third quarter, down 3.9% from the previous quarter but up 44% from the year before.

The company's current liabilities exceeded current assets by 12.45 billion baht as of Sept 30, with long-term borrowings of 27.91 billion.

True Move said the issue price of 0.5 baht per Bitco share was the same price used for a debt-to-equity conversion made last month, where Bitco converted 7.06 billion baht in debt owed to True Corp to shares.

Noppadol Dej-Udom, the deputy chief financial officer of True Corp, said the transaction helped strengthen True Move's balance sheet without incurring additional interest costs.
True shares closed yesterday on the SET at 5.95 baht, down 25 satang, in trade worth 148.39 million baht.