ENERGY / FOOD PROCESSOR SWITCHES GEARS : Sea Horse to spend B5.6bn to construct ethanol factory

ENERGY / FOOD PROCESSOR SWITCHES GEARS : Sea Horse to spend B5.6bn to construct ethanol factory.

KRISSANA PARNSOONTHORN

The SET-listed frozen seafood producer Sea Horse Plc has announced a plan to invest 5.6 billion baht in an ethanol production after its acquisition of Boon Anake Co, which owns assets for the new investment. The purchase of all of the common shares in Boon Anake would cost the company about 1.5 billion baht, SH managing director Chatree Mahattanadul said yesterday.

The company's board also approved an increase of registered capital to 3.15 billion baht from 2.78 billion baht, by issuing 370 million shares at 3.40 baht through private placements.

''The new capital will be used to finance our diversification into the alternative energy business,'' Mr Chatree said.

The capital increase and Boon Anake's acquisition plans will be proposed for shareholder approval at an extraordinary meeting in Songkhla on Feb 26.

Boon Anake's assets are valued at 1.5 billion baht, or 66.06% of SH's 2.27 billion baht in assets. Boon Anake does not operate a business, but owns a large land plot suitable for the ethanol production site.

SH said the ethanol venture would require an investment of 5.6 billion baht. Of that, one billion baht would come from its own capital and 4.6 billion from bank borrowing.

About 4.9 billion baht would be spent building the factory, 500 million would go to the warehouse and another 200 million baht would be used to develop land and reservoirs.

Once the plant is completed, it will produce 1.5 million litres of ethanol a day.

''Our core frozen seafood business is highly competitive with low growth potential. Expanding into ethanol production will help strengthen our revenue structure, which will result in improving profits,'' Mr Chatree said.

SH has posted losses for five consecutive quarters, but hopes that the new ethanol business would revive its balance sheet and pay dividends to shareholders in the near future.

The company expected to generate around 900 million baht in sales from the frozen seafood business this year, similar to last year.

Earlier this month, SH scrapped its plan to take over Power Energy, which owns a licence to produce about 400,000 litres of ethanol a day.

Last October, SH surprisingly raised its registered capital almost 18 times to 2.78 billion baht from 180 million baht and claimed to use the proceeds to acquire Power Energy Co.

SH has two new major investors, Somphote Ahunai and Vorajate Indamara, who control combined stakes of 97%.

But the plan to buy Power Energy for 150 million baht was questioned by market regulators, as the planned ethanol plant, even not completed, is estimated to worth up to 2.6 billion baht.

The SET argued that it seemed like the Power Energy acquisition would lead to a possible back-door listing since the new ethanol business would be much larger than the core business of frozen seafood exports.

Shares of SH last traded on the Stock Exchange of Thailand at 3.50 baht.

Bangkok Post
Friday January 12, 2007