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RATCH Group’s Shareholders Support 25.4 Billion Baht Investment in Paiton Energy in Indonesia Strengthens Long-Term Stable Revenue for RATCH While Increasing Business Opportunities in Indonesia

  • RATCH expects the investment process for Paiton Energy to be complete by March 2022.
  • Sources of financing for the investment include loans from financial institutions and RATCH’s working capital, along with unused credit facility of approximately 47 billion baht.
  • RATCH will recognize production capacity from the investment of 931 megawatts along with immediate income. Over the past three years, Paiton Energy’s average net profit was approximately 7,000 million baht annually.

Nonthaburi - RATCH Group Public Company Limited has announced a resolution at an Extraordinary General Meeting of Shareholders convened on October 21, 2021, for which shareholders approved RH International (Singapore) Corporation Pte. Ltd. (RHIS), an indirectly wholly-owned RATCH subsidiary, entering a transaction to purchase ordinary shares of PT Paiton Energy (PE), which operates two thermal power plants in the Republic of Indonesia that have installed capacity of 2,045 megawatts. The transaction is worth USD 809.60 million, or approximately 25,421.68 million baht. RATCH will use loans from financial institutions and internal working capital to help finance the investment, which will position it as the leading energy company in the Asia-Pacific region as RATCH moves towards its generation capacity target of 10,000 megawatts.

Ms. Choosri Kietkajornkul, Chief Executive Officer of RATCH Group Public Company Limited, explained that during the Extraordinary General Meeting of Shareholders of the company No. 1/2021 dated on October 21, 2021, the shareholders passed a resolution by 99.69% votes of the attending shareholders approving RHIS entering into an investment transaction to purchase ordinary shares of PT Paiton Energy and two entities related to this business Group from Mitsui & Co., Ltd. for a total of USD 809.60 million, or approximately 25,421.68 million baht, with details of the transaction as follows:

  1. The purchase of ordinary shares amounting to 45.515% of PE, which operates two power plants (three generation units), worth USD 707.20 million, or approximately 22,206.29 million baht.
  2. The purchase of ordinary shares amounting to 45.515% of Minejesa Capital B.V. (MCBV), a company that provides financing to PE, worth USD 53.50 million, or approximately 1,679.92 million baht.
  3. The purchase of ordinary shares amounting to 65% of IPM Asia Pte. Ltd. (IPM), which holds 84% stake of PT Paiton Operation and Maintenance Indonesia, which has an operation and maintenance agreement for the two power plants, worth USD 48.90 million, or approximately 1,535.47 million baht.

The Paiton power plants are critical to the stability of the electrical system in Java, Indonesia. PE owns two sub-bituminous coal-fired thermal powers with combined capacity of 2,045 megawatts, which represents 6% of the total power generation capacity in Java. PE’s Power Plant 1 (P7/8) has two power generating units with a capacity of 615 MW each, for a total capacity of 1,230 MW. This plant has a power purchase agreement with PT Perusahaan Listrik Negara (PLN), Indonesia’s state electricity authority, that is in effect for 43 years, from 1999 to 2042. The second power plant (P3), with a capacity of 815 MW, has a power purchase agreement with PLN that is in effect for 30 years, from 2012 to 2042. Thus, the power purchase agreements both plants have with PLN remain in effect for 21 more years.

The extraordinary shareholders' meeting also granted approval for RATCH to allocate investments according to the conditions for the share purchases, including the implementation of various matters for the completion of the investment in the Paiton Energy power plants. It is expected the transaction process will be complete by March 2022.

RATCH will finance the investment using loans from financial institutions and the company’s own internal working capital, which is sufficient for this transaction. RATCH has a loan facility from financial institutions that have not yet been used totaling approximately 46,829.42 million baht. If the company uses loans in full for the investment, RATCH’s debt-to-equity ratio will increase by 1.25 times, which remains in accordance with the conditions and requirements of the financial institutions and the issuance and offering of debentures by the company and its subsidiaries.

According to Ms. Choosri: “The PE acquisition is an important step towards stable and long-term growth, because both Paiton power plants operate efficiently and will provide significant returns on investment. This will ensure RATCH’s enterprise value remains solid for the long term, as well as substitutes the capacity of the Ratchaburi power plant gradually decreasing in accordance with its power purchase agreement term from 2025. The two Paiton power plants have sold electricity to PLN for 22 years. From 2018 to 2020, the two plants annually generated average revenues of approximately 25,000 million baht, with an average net profit of approximately 7,000 million baht per year, thanks to effective power plant maintenance and excellent environmental management. PE plans to enhance the efficiency of power generating units 7 and 8 during 2022 and 2023, which will benefit both their production and environmental aspects.”

“On behalf of the Board of Directors, I would like to thank the shareholders for their support and confidence they have placed in the direction of RATCH’s growth, and the company’s pledge to create steady returns for shareholders and shared benefits for stakeholders. As a result of the investment in the Paiton power plants, RATCH will increase our production capacity by approximately 931 megawatts according to its shareholding proportion. This transaction also offers the opportunity for ongoing expansion of investments in new projects in Indonesia, especially renewable energy projects and related businesses, which will help RATCH to grow sustainably and achieve our vision of becoming a leading energy and infrastructure company in the Asia-Pacific region,” Ms. Choosri concluded.

The PE’s two power plants are located in the Paiton Power Complex, a power generating hub critical to Indonesia's energy strategy and a major power source for Java. The complex consists of eight coal-fired thermal power plants with a total power generation capacity of approximately 4,700 megawatts.

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