Bangkok Metro (BMCL) has changed its plans for the use of money raised in a recent capital-increase share issue. It says it will use Bt1.7 billion raised in the issue to invest in equipment, to study railway extensions and for working capital instead of buying five new train carriers.

Managing director Sombat Kitjalaksana told the Stock Exchange of Thailand (SET) yesterday that BMCL would delay the purchase of the five train carriers, because of the ongoing political uncertainty and lower consumer confidence.

In a January 5 filing with the SET, BMCL said it spent Bt2.95 billion of its increased capital before the end of last year, in line with its planned purpose. However, that left Bt1.7 billion remaining, and the prospectus for the issue said it would be used for the purchase of five train carriers.

Sombat yesterday said although the negative economic factors were temporary and that there was a tendency towards a resolution, there would still be an effect on assumptions of the country's economic performance, including that of the mass-transit rail systems.

"As a result, the estimate that we will reach 403,836 passenger trips a day in 2010 might not be realised," he said.

Sombat said the company was currently selling fewer than 200,000 passenger trips a day, resulting in a deficit in passenger revenues to operating and interest costs.

"If BMCL proceeds to purchase the train carriers by following its business plan while the number of passengers remains the same, the company will be forced to borrow to maintain its liquidity," he said. He added that BMCL would then be saddled with interest payments, as well as maintenance costs for the new train carriers.

The delays in purchasing the new carriers will not affect BMCL's future income, because its existing train carriers are sufficient for maintaining the company's standard of service and its competitive edge.

He said the ability to negotiate with train carrier suppliers and lenders should be clearer later this year when bidding begins for Bangkok's extended mass transit lines. BMCL therefore feels the delay will lead to the right timing for future negotiations.

A Securities and Exchange Commission source said BMCL's adjustment of its plan to use money from the capital increase issue did not run counter to the rules, as long as the change was announced publicly.

Siriporn Chanjindamanee

The Nation