West Bangkok Water Project

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In September 21, 2000, the VKCS Co. Ltd, later renamed to Thai Tap Water Supply Co. (Thai Tap), was awarded a 30-year (2004-2034) build, own and operate (BOO) concession by the Provincial Waterworks Authority (PWA) of Thailand for the western outskirts of Bangkok covering half area of Nakhon Pathom and all of Samut Sakhon, where tap water demand was growing rapidly as artesian water was prohibited. The agreement was extendable by up to another 10 years. After a 3-year construction period, the project commenced operation in 2004. The overall committed investments apparently were about 8,375 million Baht. Thai Tap (formerly known as VKCS Thailand Co. Ltd.), was a joint venture owned 50% by Thames Water (a subsidiary of RWE of the UK) and 50% by CH Karnchang Company Limited of Thailand. In June 2005, CH. Karnchang approved a plan to buy the 50% stake it didn't already own in Thai Tap from Thames Water for THB3.6 billion (about US$91 million). The project consisted of a 320 million litres/day (320,000 cubic meters/day) water treatment plant, trunk mains, reservoirs and a local main distribution system. The sponsors were to be the EPC contractor. The project had a Water Purchase Agreement (WPA) with the government owned PWA as the offtaker. The WPA contained a take-or-pay guarantee that was backed by the Ministry of Finance and was initially for 200 million liters per day and increased to the full plant capacity by the fourth year of operations. The total project cost was Bt10 billion (roughly US$240 million) and had a 70%/30% debt-to-equity ratio. Financial closure occurred in March 2001. The equity was provided by the sponsors of the project. The Bt7.25 billion debt was provided equally by 3 local banks: Bangkok Bank, Siam Commercial Bank and Thai Military Bank. Of the total debt amount, Bt 7 billion was long term loan and Bt250 million was a performance bond. The interest rate was fixed at 7.75% during construction and reverted to a floating rate MLR (minimum lending rate) basis during operation. The term of the loan was 12 years. The project also received US$56.45 million worth of loans from the IFC. The company began supplying water in 2004 at 60,000 cubic metres per day. Output rose to 240,000 cubic metres in 2005 and was expected to reach 290,000 cubic metres per day in 2006. The project was expected to break even only after 10 years of operation. Thai Tap's planned IPO had been postponed several times. 2006 - 28 February 2006 02:13 Reuters News English (c) 2006 Reuters Limited TOKYO, Feb 28 (Reuters) - Mitsui & Co. said on Tuesday it had agreed to buy a 35 percent stake in unlisted Thai Tap Water Supply Co. Ltd. (TTW) from its parent company Ch Karnchang PCL (CHK) for about 3.6 billion baht ($92 million) to help expand its infrastructure business. Japan's second-biggest trading house aims to expand its infrastructure-related operations both inside and outside Thailand by strengthening its ties with CHK, Thailand's second-biggest construction contractor, Mitsui said in a statement. TTW owns and operates Thailand's biggest privately held water treatment plant. A spokesman for Mitsui, which aims to complete the deal by the end of March, said the move would not have a big impact on its earnings. Ahead of the announcement, shares in Mitsui closed up 1.85 percent at 1,600 yen while the Nikkei share average <.N225> edged up 0.08 percent. Ch. Karnchang currently holds a 45% stake in the company with Mitsui Water holding 35%, BECL 10% and Bangkok Bank and TMB Bank the remainder.