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TTA shareholders approve capital increase plan at AGM Up to THB 6,372 million of funds to be raised over a 30-month period to proceed with strategic investment plans

Back Jan 31, 2013

Bangkok, Thailand, 31 January 2013 -- Thoresen Thai Agencies Public Company Limited (“TTA”) held its Annual General Meeting of Shareholders (“AGM”) on 30 January 2013, at which shareholders voted to approve the Company’s capital increase plan, which aims to raise up to THB 6,372 million. TTA plans to use the proceeds of the capital increase to invest in new and second-hand vessels for its dry bulk shipping subsidiary, Thoresen Shipping Singapore Pte Ltd. (“Thoresen Shipping”), and to support the potential growth plans of its oil and gas services subsidiary, Mermaid Maritime Public Company Limited (“Mermaid”).

“The Board and management have worked diligently, examining the external operating environments of TTA’s core businesses and looking closely at the resources the Company has at its disposal. The results of this detailed study established a clear rationale to make timely, opportunistic investments in TTA’s core businesses. We are thrilled that shareholders share our view that a capital increase is the best way to achieve the objective of building long-term value and returns, and likewise saw the opportunity to co-invest in the Company’s future success as an attractive opportunity,” commented Mr. Prasert Bunsumpun, TTA’s Chairman of the Board.

Added TTA Director and shareholder Mr. Chalermchai Mahagitsiri, “The structure of the capital increase plan was designed with the specific aim of providing every shareholder the opportunity to participate in and ultimately share the rewards of TTA’s future growth and success. I am excited that we now have the mandate from TTA’s shareholder base to put our investment plans on track. Taking all factors into consideration, there is no better time to make these investments than the present, and I am confident that the plan put forth by TTA’s Board and management will bring tangible benefits for the Company and all of its shareholders."

Following the approval of the plan by 95.4028% of attending shareholders, all existing TTA shareholders will be entitled to exercise their rights by subscribing to two newly issued shares at a price of THB 14.00 for each five existing shares they hold during the subscription period, which will be from 21 February to 28 February 2013. In addition, free warrants will be issued to all shareholders who subscribe to new shares at a ratio of one warrant to two newly subscribed shares. Each warrant can be converted into one new share at a price of THB 17.00 within a 30-month period. Unsubscribed shares will be allocated to shareholders who subscribe to excess rights at the same price of THB 14.00 per share and up to a limit of 0.5 times their current holdings. Any remaining shares after the distribution of excess rights may be allocated to a private placement in one or several tranches.

Under this structure, TTA expects to raise up to THB 3,965 million in immediate funds from the rights offering (“RO”), and up to THB 2,407 million over the next two and a half years from the exercise of warrants, for a combined total of up to THB 6,372 million.

Proceeds will be used to purchase additional new-build and second-hand dry bulk vessels. Vessel prices have fallen by over 30% compared to a 10-year average in the five-year-old Supramax category and by over 70% compared to the height of the dry bulk shipping cycle in 2008. Likewise for new-build Supramax vessels, the price today stands at between USD 24 million and USD 27 million, about 20% lower than the average price of a new-build vessel over the past 10 years. In fiscal year 2012, Thoresen Shipping contributed a positive normalised EBIT of THB 118 million despite a prolonged industry downturn, outperforming the market in terms of both operating costs and freight rates.

TTA is also exploring opportunities to invest in additional offshore services assets in Mermaid given recent contract awards already securing backlog against available assets and clients showing preference for modern assets. Tender drilling rigs of five years of age or younger, for example, have recently reported utilisation rates close to 100%, with day rates approaching USD 120,000. Mermaid’s turnaround in fiscal year 2012, which was highlighted by a 138% rise in normalised EBIT compared to the previous year, was further buoyed by the signing of a USD 530 million five-year inspection, repair, and maintenance services contract, which it completed with a joint venture partner in October 2012. Meanwhile, Asia Offshore Drilling Limited (“AOD”), in which Mermaid holds a 33.75% stake, recently won its inaugural contract for the first of its three high specification jack-up drilling rigs, valued at USD 236.5 million over three years. Both contracts were signed with Saudi Aramco, the world’s largest oil and gas company, underscoring Mermaid’s success in expanding its geographic footprint beyond South East Asia into high growth regions including the Middle East.

M.L. Chandchutha Chandratat, TTA’s President & CEO stated, "TTA’s two core businesses, Thoresen Shipping and Mermaid, have undergone fundamental transformations over the last 12-18 months, streamlining costs and maximising their ability to generate stronger revenue streams. With these enhancements, the potential to take a significant step forward in terms of scale and profitability is clear and with additional capital, I am confident that TTA’s results will continue to improve in the years to come.”

Board appointments
TTA shareholders also approved the appointments of Mr. Cherdpong Siriwit and Mr. Mohammed Bin Rashed Bin Ahmad Bin Muftah Al Nasseri as Directors to succeed Dr. Pichit Nithivasin and Mr. Peter George Charles Andrew Stokes, both of whom chose not to stand for re-election. Shareholders also approved the re-election of Mr. Ghanim Saad M. Alsaad Al-Kuwari for another term as Director.

Mr. Cherdpong Siriwit is a veteran of Thailand's energy sector, previously holding roles as Director General of the Ministry of Industry’s Department of Mineral Resources as well as Permanent Secretary of the Ministry of Energy. In the private sector, he served as Chairman of a number of publicly listed companies, including PTT Public Company Ltd. and currently serves as Chairman of both the Audit and Corporate Governance Committees of IRPC Public Company Limited. Mr. Siriwit holds a Bachelor of Economics (Hons) from Thammasat University and a MA in Economics from Georgetown University, USA.

Mr. Mohammed Bin Rashed Bin Ahmad Bin Muftah Al Nasseri serves in a number of prominent roles within the United Arab Emirates (“UAE”) government, including Director General of the Office of President H.H Sheikh Mohammed Bin Khalifa Bin Zayed Al Nahyan and Under Secretary of the General Affairs Department of The Crown Prince Palace, UAE. Mr. Al Nasseri also serves as a Board member of Union National Bank Abu-Dhabi, The Emirates Insurance Company, Alwifaq Finance Company, and The National Investor Company, all in the UAE. He holds a License of Law from Emirates University.

Mr. Ghanim Saad M. Alsaad Al-Kuwari, who was first elected as a TTA Director during the Company’s 2012 AGM, also serves as Chairman and Managing Director of Barwa Real Estate and Managing Director and CEO of Qatari Diar Real Estate Investment Co. He also chairs a number of boards in Qatar and regionally, including Qatar Project Management Company, Barwa Bank, Al Imtiaz Investment Company, A’ayan Real Estate, Al Jazeera Academy, and Al Ritaj Investment. Mr. Al-Kuwari holds a MBA from Kent University in the United Kingdom and a BA in Social Sciences from Qatar University.

“I would like to take this opportunity to thank Dr. Nithivasin and Mr. Stokes for their substantial contributions to TTA during their respective terms and to wish them the best in their future endeavours,” added Mr. Bunsumpun. “The three Board appointments ratified by shareholders today bring to the Company much needed expertise in the energy sector as well as in the Middle East, a geographic region of growing importance, particularly to Mermaid, which has made significant strides to expand its footprint in markets like Qatar and Saudi Arabia. I am confident that the qualifications these incoming directors bring to the Board will be beneficial to the Company, particularly as the oil and gas industry has entered into what is likely to be a multi-year cyclical upturn.”

Dividends
In light of TTA’s investment plan, shareholders ratified the Board’s proposal not to pay dividends for the 2012 fiscal year.

About TTA
Thoresen Thai Agencies Public Company Limited ("TTA") is a strategic investment holding company listed on the Stock Exchange of Thailand (TTA:TB). Its investment strategy is to grow through a balanced and diversified business portfolio of transport, energy, and infrastructure assets, both domestically and internationally. TTA's evolution away from a pure dry bulk shipping operator began in 1995 with an investment in Mermaid Maritime Public Company Limited, which has since been listed on the Singapore Stock Exchange (MMT:SP). Since then, TTA has acquired interests in fertiliser and logistics (Baconco Co., Ltd.) coal-related businesses (SKI Energy Resources Inc, Merton Group (Cyprus) Limited, and Unique Mining Services Public Company Limited), petroleum tankers (Petrolift, Inc) and a port in Southern Vietnam (Baria Joint Stock Company of Service for Import Export of Agro Forestry Products and Fertilizers). For more information, please visit www.thoresen.com