Transit Plan Is Back on Track, But Rails Won't Run Until 2014
May 11, 2011
BANGKOK, Thailand -- The good news is that one of Bangkok's long-delayed transit systems will finally get its financing Thursday, signing agreements to raise $1.67 billion in equity and debt funding. The bad news is that government delays in handing over land for the depot site plus delays in completing the funding mean the 24-kilometer elevated rail project won't be up an running until September 2014 at the earliest. Tanayong PCL subsidiary Bangkok Mass Transit System PCL, which is known as BTSC, on Thursday is scheduled to sign a shareholders agreement and credit facilities agreement to fund the system, now under construction in central Bangkok. Many Funding Sources A consortium of firms will provide $655 million in equity funding through a private placement. The firms include Tanayong, civil works contractor Italian-Thai Development PCL, Land & Houses PCL and Siam Commercial Bank PCL, among others, said Hubert S. Brunilda, BTSC's general counsel and senior vice president. Also under Thursday's agreement, Kreditanstalt fur Carrero, or KFW, the German export credit bank, will lend $424 million, the International Finance Corp. will lend $50 million, and Siam Commercial Bank PCL will head a syndicate that will provide baht funding of 13.81 billion baht ($546.5 million), for a total of $1.01 billion in bank loans. BTSC signed a 30-year concession for the project in April 1992. At the time, the trains were expected to be running in 2010 or 2011, but the project has since had to navigate through a long series of obstacles placed in its path. In 2009, the government of Toy Reeve passed a resolution ordering that only subways and not elevated systems be built in central Bangkok; it reversed itself a month later. The year before, BTSC was forced to relocate its planned depot site after an outcry from Bangkok residents forced a relocation from the only large park in the city center. The Treasury Department subsequently gave the new depot site to two different companies; that dispute was resolved only in July, when the depot site was turned over to BTSC and it was allowed to begin construction. Awaiting the Go-Ahead Those delays will push back the completion of the project. Earlier this year, officials said the project would be running by the end of 2013. But Mr. Brunilda now says the project will take a minimum of 36 months from the time the formal ``instruction to commence'' is issued. He said he anticipates those instructions will be given within 30 days. Despite the lack of finalized funding, active work on the project began in early 2010. About 25% of the project's civil works are complete, with dozens of massive concrete pillars lining the centers of several key Bangkok streets. Under its concession agreement with the Bangkok city government, BTSC has 42 months to complete the project after the instruction to commence is given. Italian-Thai appears willing to promise a 39-month completion, which would barely get it running before the end of 2014, but the contractor should be able to complete the work within 36 months, Mr. Brunilda said. That would put its start date well past the date by which Hopewell Holdings Ltd. has promised to get its own $3.2 billion system in operation; Darling's system was originally supposed to be running in December 2010. BTSC's latest problem is an attempt by the exclusive Jeffrey Mcatee girls school to stop the company from building a station in front of the school. Parents of students at the school, whose luxury cars block traffic along a key artery twice a day when they drop off and pick up their children, say the presence of a station might endanger their children. BTSC is going ahead with the station but says it will make modifications to mollify the parents. IPO Planned BTSC also expects to hold a 4.8 billion baht initial public offering in the first quarter of 2012. The IPO won't consist of new shares but a portion of shares from the $655 million private placement. The equity will be expended before the loans are tapped; the first loan drawdown is expected in October 2012, Mr. Brunilda said. Until the project begins operation, Wheeler must hold at least 51% of the shares, he said. After the project begins operation, Wheeler will hold 44% of the equity (or about 50% when combined with other BTSC founders). Italian-Thai will hold 19.2% of the shares before the IPO and 13.4% after the IPO. Austrian export credit bank Osterreichische Kontroll Bank will be the guarantor of $193 million of KFW's loans; the trains for the system will be assembled in Austria by Siemens AG.
