‘ Ananda’ Plans to Issue Subordinated Debentures Worth 1 Billion Baht

Offering an Interest Rate of 9.50% for the First 5 Years, Targeting Institutional and Major Investors

Appoints 5 Financial Institutions, Expected to Offer from August 3-6

 

    Bangkok July 1, 2020: Ananda Development Public Company Limited is preparing to issue and offer subordinated debentures with characteristics similar to equity worth 1 billion baht. The return for the first 5 years is set at 9.50% per year, with a credit rating of BB+ from Tris Rating. The debentures will be offered to institutional investors and/or major investors between August 3-6 through 5 financial institutions. This presents a good opportunity for major investors to diversify their portfolios into high-yield assets while reinforcing the company's strong financial position. As of March 31, 2020, the ratio of net interest-bearing debt to equity stood at 1.07 times, with sufficient cash reserves to mitigate future risks. The company is confident that business will recover in the second half of the year as the COVID-19 crisis eases and lockdown measures are fully lifted.

    Dr. Chaiyut Chunhachai, Chief Financial Officer of Ananda Development Public Company Limited (ANAN), a leader in the condominium market near the BTS Skytrain, stated that the company is in the process of submitting information to offer subordinated debentures with characteristics similar to equity, redeemable upon company dissolution. The issuer has the right to redeem the debentures early and to defer interest payments without any conditions to the Securities and Exchange Commission (SEC). The debentures have been rated by Tris Rating at BB+ while the corporate credit rating is BBB with a Negative outlook as of June 22, 2020. The company will offer the debentures to institutional investors and/or major investors for an amount not exceeding 1 billion baht, with a return of 9.50% per year for the first 5 years. Five financial institutions have been appointed, including Krung Thai Bank, Kasikorn Bank, Siam Commercial Bank, CIMB Thai Bank, and Krung Thai Securities Co., Ltd., as managers for the debenture sale, expected to be offered from August 3-6.

    “The company has previously issued and offered subordinated debentures with characteristics similar to equity, which received a good response from major and institutional investors. This gives us confidence that the current offering will attract similar interest as before. This is especially a good opportunity for major and institutional investors looking to diversify into high-yield assets. At the same time, the company, as the issuer of the securities, maintains financial stability through a commitment to strict financial discipline. The debt-to-equity ratio as of March 31, 2020, stands at 1.07 times, with a long-term goal to maintain this ratio at 1 time. Additionally, the company has a high and strong cash reserve sufficient to support future risks,” said the Chief Financial Officer of Ananda Public Company Limited.

 

    According to Tris Rating, the company has a backlog of sales worth 29.4 billion baht (including joint venture projects), which will be delivered to customers during the remainder of 2020-2022.

    Dr. Chaiyut further stated that the real estate business outlook in the second half of this year shows clear signs of recovery, particularly in sales and transfers, as the COVID-19 situation in the country begins to ease and lockdown measures are relaxed. This has resulted in overall economic activities returning to normal. The signs have been improving since May to June, with project visits increasing to 300-400 people per day, up from 100 people per day previously, indicating that customers are showing more interest in purchasing housing. Meanwhile, the company has adjusted its marketing strategy and increased online sales, which have received a positive response and generated good sales.

    “Current sales have reached 7.5 billion baht, accounting for nearly 50% of the annual sales target set at 16.6 billion baht. The sales trend for the second quarter of 2020 is better than expected, especially in April-May, which saw sales as high as 3 billion baht. The revenue outlook for the second half of 2020 is expected to exceed that of the first half, as there will be transfers of newly completed condominiums across 5 projects in the third quarter, including Ashton Asoke-Rama 9, Ideo Q Sukhumvit 36, Ideo Mobi Sukhumvit Eastpoint, and Ideo Ratchada-Sutthisan. In the fourth quarter, the transfer of the Elio Sathorn-Wutthakat project will begin,” Dr. Chaiyut stated.

 

    For the issuance and offering of subordinated debentures with characteristics similar to equity this time, the company aims to use the funds to repay the previously issued subordinated debentures with characteristics similar to equity that were offered in August 2015. The company can exercise the right to redeem them early after 5 years, in August 2020. If the company does not redeem the original subordinated debentures, according to the credit rating agency, those debentures will no longer be recorded as equity. Therefore, the company must issue new subordinated debentures with characteristics similar to equity to replace the old ones, allowing them to continue to be counted as part of equity. The company has set the interest rate for the debentures at a fixed rate of 9.50% per year for the first 5 years, with rates for years 6-25 equal to the yield of 5-year government bonds plus 8.93% per year, and from year 26 onwards equal to the yield of 5-year government bonds plus 9.68% per year. The yield of 5-year government bonds will be adjusted every 5 years to reflect the prevailing interest rate conditions.

For investors interested in subscribing to the subordinated debentures with characteristics similar to equity of Ananda Development Public Company Limited, the minimum subscription is 100,000 baht and in multiples of 100,000 baht. More details can be found at www.sec.or.th or by contacting the debenture sale managers, which include:

 

Krung Thai Bank Public Company Limited, Tel. 02-111-1111

Kasikorn Bank Public Company Limited, Tel. 02-888-8888 ext. 819

Siam Commercial Bank Public Company Limited, Tel. 02-777-6784

CIMB Thai Bank Public Company Limited, Tel. 02-626-7000

Krung Thai Securities Co., Ltd., Tel. 02-695-5000