Bangkok--Mar 23--
Fitch Ratings-Bangkok/London-23 March 2004: Fitch Ratings (Thailand) Limited has today assigned Thailand's Bangkok Aviation Fuel Services Public Company Limited ("BAFS") Long-term National 'A-(tha)' (A minus (tha)) with Stable Outlook and Short-term 'F2(tha)' ratings.
The ratings reflect BAFS's dominant market position in Thailand's aviation fuel services industry as well as the rising trend of Bangkok's air traffic. BAFS has enjoyed a natural monopoly in the aviation fuel services business at Bangkok International Airport ("BIA") through secured long-term sale contracts with major customers. The opening of the new international airport, Suvarnabhumi Airport ("SA"), which is expected to handle all international and domestic commercial flights and is scheduled to start operations at end-3Q05, should enhance BAFS's operating performance due to the airport's increased capacity. BAFS's operations at BIA are expected to wind down, though it will continue to service cargo and maintenance operations there. The ratings are also underpinned by BAFS' strong ownership and good track record of the senior management team. In addition, the ratings reflect BAFS's strong financial position and its stable cash flow generating capability. At end-2003, BAFS's net debt to EBITDA ratio was 2.2x, while its EBITDA to interest expense plus capitalised interest ratio was 16.5x.
On the other hand, BAFS's financial leverage is expected to weaken over the next two years, as a result of its debt-funded investments at SA. BAFS plans to spend about THB2.2 billion in capital expenditure during 2004-2005 for investments in the main depot, the hydrant pipeline and the intoplane services at SA. Taking into account the additional debt-funded new investments at SA and the expected dividend payout ratio of 50% annually, BAFS's net debt to EBITDA ratio is likely to deteriorate to 5.0-6.0x over the medium-term. The planned start-up of SA should see its net debt to EBITDA ratio strengthen again to between 2.5x and 3.5x by 2006/7, although a delay will likely result in a slower recovery in its financial leverage. In addition, the Thai Baht appreciation may affect BAFS's USD-linked revenue.
Established in 1983, BAFS is the sole provider of fully integrated aviation fuel services at BIA, which accounts for over 95% of the country's fuel uplift volume. At SA, BAFS will be the single operator for the main depot and the hydrant pipeline services, while it is going to compete with another operator on the intoplane service. BAFS's major shareholders comprise Thai Airways International Public Company Limited, PTT Public Company Limited, Airports of Thailand Public Company Limited and other major foreign oil companies in Thailand, altogether holding a 63% stake in the company. Listed on the Stock Exchange of Thailand in 2002, the company's market capitalisation was THB4.0bn as at end-February 2004.
A full rating report on Bangkok Aviation Fuel Services Plc. is available at: www.fitchratings.com
Contact: Wasant Polcharoen, Bangkok, Tel: +662 655 4763, Lertchai Kochareonrattanakul, Tel: +662 655 4760, Vincent Milton, Tel: +662 655 4759
Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with sub- or low-investment grade international sovereign ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA (tha)' for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. End.
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