Thailand: BCP plans sweet merger with Khon Kaen

Thailand: BCP plans sweet merger with Khon Kaen

SET-listed and mostly state-owned Bangchak Corporation Plc (BCP) is planning
an amalgamation with Khon Kaen Sugar Industry Plc (KSL), Thailand's
fourth-largest sugar miller, to form a new biofuel producing company.

BCP president and chief executive Chaiwat Kovavisarach said the move is
aimed at capitalising on the rising demand for biofuel along with the upward
trend of alternative renewables.

The amalgamation will be done through BCP's 99.99%-owned subsidiary BBP
Holding Co Ltd and Khon Kaen's 99.99%-owned subsidiary, KSLGI Co Ltd.

He said the companies are working on the legislative process and the
amalgamation is expected to complete by October.

"The new company is named BBGI Co Ltd with registered capital of 2.5 billion
baht. It will be a flagship company of Bangchak, which will hold a 60%
stake, while Khon Kaen will hold the remaining 40%," Mr Chaiwat said.

The amalgamation would rank BBGI the biggest biofuel producer in Thailand
with total capacity of 1.71 million litres per day. Of the total, around
900,000 litres will be sugar-made ethanol and the rest 810,000 litres
biodiesel, he added.

"This was a part of BCP's strategy to create added value on the company's
biofuel products to match the Thailand 4.0 concept as well as to comply with
the concept of BCP going green," Mr Chaiwat said.

Apart from biofuel projects, BCP also seeks to capitalise on the rising
demand for lithium in the power storage business. It has spent C$42.5
million (1.1 billion baht) to acquire more shares in Lithium Americas
Corporation (LAC).

Under the terms of acquisition, Bangchak has agreed to lend LAC up to US$80
million (2.7 billion baht) and has committed to buying lithium ore from the
LAC-run Cauchari-Olaroz mine in Argentina for 20 years.

BCP is also investing 15 billion baht to revamp both its oil-retailing and
non-oil businesses over the next three years, a senior executive said. The
first phase could see the addition of 300 petrol stations by 2019
nationwide, up from 1,000, while the second phase of the revamp entails
building up its non-oil business through the purchase of a European food
store chain franchise to be sited at its petrol stations.

BCP posted a net profit of 2 billion baht in the first quarter of this year,
up from 269 million on year.

The amalgamation, however, will pose a negative outlook for KSL, said an
analyst at Capital Nomura Securities who asked for anonymity. This is
because the net margin from the new ethanol business is expected to decline
due to the limited and high cost of raw materials as well as a rise in
production costs.

Net margin for KSL after the amalgamation will be lower than the current
margin, said the analyst. The only benefit for KSL is BCP's larger customer
base.

BCP shares closed yesterday on the SET at 34 baht, down 25 satang, in a
trade worth 221 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1291095/bcp-plans-sweet-merger-with
-khon-kaen

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com