Thailand: Energy Earth defaults on two debt payments

Thailand: Energy Earth defaults on two debt payments

SET-listed Energy Earth Plc (EARTH), a coal trader, has defaulted on a
90-million-baht debt, and it is still unclear how the company would pay the
hundreds of millions of baht in further debt due next month.

Managing director Thanawat Pratoomsuwan said the company had offered 40
million baht in bills of exchange (B/Es) on March 6, 2017 to be its working
capital. The amount has been invested by an unnamed financial institute.

The B/Es were due on June 6, but the company had informed the Stock Exchange
of Thailand that it failed to pay the debt on time because of tight cash
flow. Meanwhile, the company is still in talks with the financial institute
to review its cash flow situation.

Mr Thanawat said the company also failed to repay another lot of B/E debt
worth 50 million baht due on June 8, 2017.

"To rectify the cash flow problem, the company is now negotiating with the
financial institute and we hope to be able to renew our credit facility by
August 2017 and repay the due bills of exchange soon," he said.

In the event of a default, the company has the obligation to repay default
interest at 7.5% per year. However, such defaults do not permit other
creditors to call a default on other liabilities to become immediately due
and payable.

Apart from the 90-million-baht default, the company is also due to pay B/E
debt worth total a of 470 million baht by July. So far, there has been no
announcement from Energy Earth on how it would manage to pay the looming
debt on time.

The company is seeking loans to help ease its tight cash flow in order to be
able to repay all its debts later.

"The company will temporarily have a very tight cash flow," Mr Thanawat
said. "Once we have clarified the loans issue with the commercial institute,
we will be able to repay the B/Es. Currently, the company is still operating
normally."

Energy Earth had doubled its revenue in the first quarter this year to 7.9
billion baht, compared with 4.1 billion baht in the same period last year,
largely because of a rising demand for coal both in domestic and overseas
markets.

But the company posted a net loss of 69 million baht in the first quarter,
compared with a net profit of 112 million baht a year earlier, because of a
surge in sales and operating costs, which jumped 116% to 7 billion baht in
the first quarter of 2017 from 3.8 billion baht in the prior-year period.

The company also had a 341-million-baht loss owing to exchange rate
fluctuations in the first quarter of this year.

EARTH shares closed yesterday on the SET at 1.45 baht, down 61 satang, in
heavy trade worth 3.51 billion baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1265291/coal-trader-in-financial-st
raits

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com