Thailand &Vietnam: ThaiBev announces restructuring of its loan and interest in Sabeco

UOB Kay Hian is reiterating its “buy” recommendation on Thai Beverage (ThaiBev) with a target price of 80 cents, The Edge Singapore reported on January 4.

This came on the back of the group announcing on January 3 that it will be undergoing a loan restructuring exercise, which will involve the conversion of its entire loan amount and interest in Sabeco of US$4.6 billion into share capital.

BeerCo, an indirect wholly-owned subsidiary of ThaiBev, holds 49% of shares in Vietnam F&B, which in turn owns 100% of the charter capital of Vietnam Beverage, the company that holds the Sabeco shares, comprising 53.59% of all issued shares in Sabeco.

ThaiBev had granted the loan to Vietnam Beverage to finance the Sabeco acquisition.

Since the removal of foreign ownership restriction on Dec 18, the group will be viable for the Loan Conversion option. And with ThaiBev controlling a majority of the board seats in Sabeco, this loan restructuring does not come as a surprise.

Currently, the group holds about 99.4% stake in Vietnam Beverage, which has effectively increased its stake in Sabeco to 53.5% from 26.3% previously.

With this restructuring, the joint venture partners are effectively removed, providing a more transparent control of Sabeco by ThaiBev.

However, according to the group, there is a slight earnings dilution of -0.2% from the loan restructuring, which might suggest that the loss in interest income is more than the earnings gained from consolidation of shareholdings.

In a note on January 4, analyst Lucas Teng says, “In our view, this may not be too significant given the potential gain in synergies between Sabeco and ThaiBev moving forward.”

“Overall, we are positive on the loan conversion as it provides ThaiBev with a more transparent control of Sabeco,” adds Teng.

04 January, 2019