Thai banks close to lending crippled NFC up to Baht900m

06 February 2002 09:09  [Source: ICIS news]

SINGAPORE (CNI)--Two Thai banks are on the point of agreeing to lend up to Baht900m ($20.5m/Euro23.7m) to cash-strapped National Fertiliser Co (NFC) to keep the company afloat until it can work out a more permanent solution to the restructuring of its massive debt.

An NFC source told CNI on Wednesday that Krung Thai Bank and Siam City Bank were seriously considering advancing the loan to help the stricken company overcome an acute shortage of working capital.

At the end of 2001, the source said the company's principle debt stood at Baht8.3bn, with outstanding interest at Baht2.6bn.

The new loan would help NFC continue to meet its costs, including buying feedstock for its fertiliser operations, after a Baht 600m loan made last August by the Petroleum Authority of Thailand (PTT) runs out at the end of March this year.

The loan would also buy time for NFC to come up with a long-awaited restructuring plan which might be acceptable to its creditors and the Thai government.

Krung Thai Bank and Siam City Bank are reported to be interested in bailing out NFC since the company is 57% owned by the state. In addition, as creditors of NFC, both banks would take considerable losses if the company was allowed to collapse.

NFC expects to complete its debt restructuring plan by the end of March this year.

As part of the plan, the company hopes to attract a foreign fertiliser company to take a small stake of about 20% to help boost liquidity and upgrade its plants. No foreign partner has yet been named.

Under the plan, NFC hopes to obtain creditor approval to halve its total debt of Baht8.3bn, convert Baht2bn of debt to equity and defer the repayment of another Baht2bn for 10 years.

NFC is hoping to produce 620 000 tonne of fertiliser in 2002, and claims it can turn its massive operating losses before tax and depreciation into a Baht400m profit this financial year to 31 December 2002.

NFC posted a net loss for the first nine months of its last financial year to 30 September 2001, which amounted to more than half of its sales over the first three quarters. It registered a net loss of Baht1.4bn on net sales of just Baht2.78bn.

NFC has incurred losses since mid-1997 when the rapid fall in the value of the Thia baht dragged the rest of Asia's economies into recession.

By: Staff Reporter
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