Malaysia: KNM proposes US$80 mil Thai bonds to fund bio-ethanol plant

Malaysia: KNM proposes US$80 mil Thai bonds to fund bio-ethanol plant

KNM Group Bhd is proposing to issue bonds in Thailand of up to US$80 million
equivalent in Thai Baht guaranteed by Credit Guarantee and Investment
Facility (CGIF), a trust fund of the Asian Development Bank.

To recap, KNM Renewable Energy Sdn Bhd had on May 19 completed the
acquisition of the entire equity interest in Asia Bio-Fuels Ltd and Asia
Biofuels II Ltd (ABL Group). Upon completion of the deal, ABL Group now owns
a combined 72% equity interest in Impress Ethanol Co Ltd (IEL) and a 49%
equity interest in Impress Farming Co Ltd.

In a filing to the exchange today, KNM said the construction of IEL's Phase
1 bio-ethanol plant with a production capacity of 200,000 litres of ethanol
per day is ongoing.

"The construction of Phase 2 of the bio-ethanol plant for an additional
200,000 litres (of) ethanol per day is expected to commence by the first
half of 2017, due to the favourable ethanol market demand in Thailand.

"Accordingly, the group is proposing to undertake the proposed Thai bonds to
raise the funds required by IEL," said the firm.

KNM said the proceeds from the proposed Thai bonds will be used to provide
foreign currency lending to IEL, which will in turn use the proceeds to
finance future expansion and working capital expenses for its bio-ethanol
plants.

"With the credit guaranteed from CGIF, the proposed Thai bonds has been
assigned a credit rating of AAA/Stable (Triple A/Stable Outlook) by TRIS
Rating Co Ltd," said KNM.

The group shared that the proposed Thai bonds is expected to be fully issued
by December 2016.

"The total costs related to the proposed issuance to be incurred in the
fourth quarter of 2016 is estimated at approximately RM1.1 million, the
interest payments shall be dependent on the final coupon rates to be fixed,"
said the firm.

The gearing ratio of KNM as at Dec 31, 2015 is 0.27 times. After the
completion of the proposed Thai bonds, the group's total debts will increase
from RM718.5 million as at Dec 31, 2015 to about RM1.03 billion, and its
gearing ratio is expected to increase to 0.38 times based on the total
equity as at Dec 31 last year.

KNM shares closed 0.5 sen or 1.22% lower at 10.5 sen for a market value of
RM874.45 million.

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Ref:
http://www.theedgemarkets.com/my/article/knm-proposes-us80-mil-thai-bonds-fu
nd-bio-ethanol-plant

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com