Thai PTT to pay $4 billion for Glow Energy as Engie exits coal

By Chayut Setboonsarng

BANGKOK/PARIS (Reuters) - Thailand's PTT Pcl (PTT.BK) is to buy power firm Glow Energy Pcl (GLOW.BK) from Engie (ENGIE.PA) in a deal that could be worth more than $4 billion and will boost PTT's domestic position.

For Engie, the sale rounds out a two-year plan to sell off some 15 billion euros ($17.4 billion) of non-core assets and re-invest those proceeds away from coal and into areas such as renewable energy, power grids and energy services.

PTT's Global Power Synergy Pcl (GPSC) (GPSC.BK) said it would first pay 97.56 billion baht (2.3 billion pounds) for Engie's 69 percent stake in Glow, before launching a tender offer for the remaining shares. GPSC first proposed the deal earlier this week.

If the same terms were offered to Glow's other shareholders, the remaining stake would be worth another 43.6 billion baht (1 billion pounds). With its own market value around just $3.3 billion, GPSC also unveiled fund-raising plans, including loans and new share and bond issues.

The deal will allow state-backed PTT to nearly triple the size of its power generating arm, expanding capacity to 4,835 megawatts (MW) from GPSC's 1,940 MW.

"This acquisition will enlarge our industrial customer base," GPSC CEO Toemchai Bunnag said in a statement.

GPSC said it would finance the purchase through short-term loans of 142.5 billion baht to pay for both the Engie stake and subsequent tender offer. It is also considering issuing up to 74 billion baht of new shares as well as new bonds of up to 68.5 billion baht.

ENGIE ASSET SALE PROGRAMME COMPLETE

GPSC shares fell 3.9 percent but then recovered to close just 0.7 percent lower. Shares in Glow closed 1.9 percent higher. Shares in Engie closed 0.4 percent higher.

Engie said the Glow sale was in line with its aim of reducing coal-fired power generation capacity as part of plans to cut carbon emissions.

It said the sale would result in net proceeds of 2.6 billion euros and a 3.3 billion euro reduction of its net debt.

Following the sale of Glow - which has one gigawatt of coal and two GW of gas-fired generating capacity - Engie still has seven GW of coal-fired capacity, of which 1.6 GW in Germany, 1.4 GW in Chile, 1.3 GW in Morocco, 1.1 GW in Brazil and less than 1 GW each in the Netherlands, Portugal and Peru, Engie said.

"Thanks to this sale, we are now above 100 percent of the planned asset sales," an Engie spokesman said.

Analysts said the deal made strategic sense for PTT.

Glow has high-quality assets strategically located in Thailand's industrial east, CGS-CIMB Securities (Thailand) analyst, Suwat Sinsadok said.

Antitrust concerns are not expected because at the new capacity, GPSC would be Thailand's fourth-largest electricity producer after Ratchaburi Electricity Pcl (RATCH.BK), which has an installed capacity of 5,211 MW. The government has a 45 percent stake in Ratchaburi.

Thailand's largest power producer is state-owned Electricity Generating Authority (EGAT) with a capacity of 16 GW.

(Additional reporting by Geert de Clercq in Paris; Editing by Kenneth Maxwell/Sudip Kar-Gupta and Jane Merriman)