Minister Says Italian-Thai Good Enough for Project by Phairath Khampha 16 November 2001 Thailand's transport minister on November 8, 2001 defended the cash-strapped Italian-Thai Development Co, saying the firm has been judged capable of undertaking the construction of Nong Ngu Hao airport. During that day's House meeting, Democrat MPs had questioned why the firm was picked for the 36 billion baht project although it had been ordered by the Central Bankruptcy Court to undergo financial restructuring. But Wan Muhamad Nor Matha, the transport minister, said in reply that the requirement for Italian-Thai to meet its financial obligations had nothing to do with the airport project. And Italian-Thai Development Plc (ITD) was upbeat about its performance for 2001, and said the Suvarnabhumi International Airport project would help its revenue grow by at least 10% in each of the next three years so it could look at going back to restarting the design-build Nam Theun 2 hydropower project in Laos. Italian-Thai was now part of a consortium which won the bidding for the construction of the Nong Ngu Hao airport's terminals and boarding areas. The consortium also included two Japanese firms--Takanaka Co and Obayashi Co, he said. Siam Commercial Bank had agreed to lend 9.9 billion baht [1 US Dollar = 44.756 Thai Baht] to Italian-Thai, while the Bank of Tokyo and Mitsubishi had extended a 54 billion baht credit line to the two Japanese firms for the airport project. Therefore, he said, the firm was judged capable of undertaking the project together with its Japanese partners. Meanwhile, the new airports authority governor suggested that both Nong Ngu Hao and Don Muang should operate as international airports in the future to save national investment in expanding Nong Ngu Hao. ACM Therdsak Sajjarak said initially Nong Ngu Hao should operate alone because it would be able to serve up to 36 million passengers yearly. "But when the air traffic volume exceeds that capacity, the state can save money by operating Don Muang and delaying Nong Ngu Hao expansion. Dual airport operation exists in many other countries," he said. Contract improves Italian-Thai outlook - 10% annual growth in next three years Italian-Thai Development Plc (ITD) was upbeat about its performance for 2001, and said the Suvarnabhumi International Airport project would help its revenue grow by at least 10% in each of the following three years. The country's largest construction contractor on November 8 signed a contract with New Bangkok International Airport Co (NBIA), to build the airport's main passenger terminal and concourse for 36.66 billion baht. President Premchai Karnasuta said that about 40% of the total contract value would go to ITD, thereby increasing the value of its construction projects in hand to about 30 billion baht. The company forecast revenue of between 13 billion and 15 billion baht in 2001, rising to 20 billion baht or more by 2004. ITD in 2000 suffered a net loss of 3.97 billion baht on total revenue of 12.39 billion baht. For the first six months of 2001, it reported a net loss of 2.68 billion baht, compared with a loss of 390.34 million in the same period during the previousyear. The company attributed the loss to additional provisions for doubtful debt, losses on diminution in value of investments, as well as losses on investments in subsidiaries, joint ventures and associated companies. ITD said it expected a further loss in the second half of 2001 because of high operating costs and the interest burden from its 20-billion-baht in debts. "However, the company is likely to turn around and enjoy a net profit in the first quarter of next year, thanks to this successful contract to build the new airport's terminal and concourse and expected successful debt restructuring," said Mr Premchai. The airport job was expected to take 36 months, starting in December 2001. Mr Premchai said that winning the project would help accelerate sluggish debt-restructuring negotiations with its creditors led by Siam Commercial Bank. Other major creditors include Credit Suisse First Boston, BNP Paribas Bank, and holders of bonds. The company had sought help from the Central Bankruptcy Court in September to speed up debt restructing, which had become more complicated after major creditors sold some debts to other financial institutions. Mr Premchai expected the restructuring would be completed in December. Under the restructuring plan, ITD planned to buy back debt at discounted prices, extend repayment periods and convert some creditors' debt into equity. The debt repayment would be funded by the sale of non-core assets including its shares in the provincial fixed-line operator Thai Telephone and Telecommunication and skytrain operator Bangkok Mass Transit System, in which the company holds about 10% each. These developments were seen as good news for Italian-Thai in that its cash flow problems would be eased, thus allowing it to go ahead with the design-construction of the Nam Theun 2 hydropower project in Laos.