Ratch approves plan to acquire 2 plants from PE

Shareholders of SET-listed Ratch Group have approved a plan to acquire two coal-fired thermal power plants, with combined capacity of 2,045 megawatts, from PT Paiton Energy (PE) in Indonesia, as part of its move to increase electricity generation capacity to 10,000MW within 2025. Current capacity stands at 8,292MW. The deal, worth around 25.4 billion baht, will be made through its wholly-owned RH International (Singapore) Corporation Pte (RHIS).

The majority of shareholders voted in favour of the purchase of 45.515% ordinary shares of PE from Mitsui & Co, said Choosri Kietkajornkul, newly appointed chief executive of Ratch.

Ratch expects the transaction process for the deal will be completed by March next year.

“The Paiton power plants are crucial to the stability of the electricity system in Java which represents 6% of the total power generation capacity,” said Ms Choosri.

PE’s two power plants are located in the Paiton Power Complex, a power-generating hub and a major power source for Java, the most populous island in Indonesia.

The complex consists of eight coalfired thermal power plants, with a total power generation capacity of around 4,700MW.

PE’s power plants have power purchase agreements with PT Perusahaan Listrik Negara, the electricity distribution and generation arm of the Indonesian government.

The agreements will remain in effect for 21 years.

According to Ratch, the new asset purchase will be financed by capital spending, which comprises internal working capital and loans from financial institutions.

The company still has a high capability to raise funds for future expansion, thanks to its debt-to-equity ratio which will increase by only 1.25 times if it uses a loan of 46.8 billion baht.

“The new asset acquisition is viewed as having a stable and long-term growth because of its efficient operation,” said Ms Choosri.

“The asset will provide significant returns on investment, with an average net profit of approximately 7 billion baht per year.”

The purchase will also offer an opportunity for Ratch’s ongoing investment expansion in Indonesia, including renewable energy projects.