KNM to is­sue Thai bonds up to US$80m for bioethanol plants

The Sun (Malaysia) - - SUNBIZ -

PE­TAL­ING JAYA: KNM Group Bhd plans to is­sue up to US$80 mil­lion (RM329.9 mil­lion) Thai bonds to raise funds for the con­struc­tion of bioethanol plants in Thai­land.

KNM told Bursa Malaysia the plants are to be con­structed by Im­press Ethanol Co Ltd (IEL), a 72%-owned sub­sidiary of re­cently ac­quired Asia Bio-Fu­els Ltd and Asia Bio-Fu­els II Ltd.

Con­struc­tion of the first phase of IEL’s bioethanol plant with a pro­duc­tion ca­pac­ity of 200,000 litres ethanol a day is on­go­ing. The con­struc­tion of Phase 2 of the bioethanol plant for an ad­di­tional 200,000 litres ethanol a day is ex­pected to start by the first half of 2017 due to the favourable ethanol mar­ket de­mand in Thai­land.

KNM will use pro­ceeds from the pro­posed Thai bonds to pro­vide for­eign cur­rency lend­ing to IEL, which will in turn use it for, among oth­ers, fi­nanc­ing fu­ture expansion and work­ing cap­i­tal ex­penses for its bioethanol plants.

The Thai bonds will be guar­an­teed by Credit Guar­an­tee and In­vest­ment Fa­cil­ity (CGIF), a trust fund of the Asian De­vel­op­ment Bank.

With the credit guar­an­teed from CGIF, the pro­posed bond is­sue has been as­signed a credit rat­ing of “AAA/Sta­ble” (rated tiple ‘A’ with a sta­ble out­look) by TRIS Rat­ing Co Ltd.

The pro­posed bond is­sue is ex­pected to be fully is­sued by De­cem­ber this year. The to­tal costs re­lated to the pro­posed is­suance to be in­curred in the fourth quar­ter of 2016 is es­ti­mated at RM1.1 mil­lion.

The in­ter­est pay­ments will be de­pen­dent on the fi­nal coupon rates to be fixed, KNM said.

United Overseas Bank (M) Bhd was man­dated as the prin­ci­pal ad­viser to han­dle the bond is­suance.

The is­suance will see KNM’s gear­ing ra­tio ex­pand to 0.38 from 0.27 as at Dec 31, 2015. The group’s to­tal debt will in­crease from RM 718.5 mil­lion as at Dec 31, 2015 to about RM1.04 bil­lion.

KNM’s board of di­rec­tors is of the opin­ion that the ac­cep­tance of the pro­posed Thai bonds is in the best in­ter­est of the group.

The com­pany’s shares fell half a sen to 40.5 sen yes­ter­day, with some 8.59 mil­lion units chang­ing hands.

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