[Intl-tobacco] Thai tobacco to be partially privatized

[Robert Weissman]

TTM to offer shares and list on SET by November
Maximum stake of 30% to be offered to investors
by Wichit Sirithaveeporn
THAILAND;
Source: Bangkok Post, 2002-03-07The Thailand Tobacco Monopoly will
launch an initial public offering and list on the Stock Exchange of
Thailand by November, according to Finance Minister Somkid
Jatusripitak.

A stake of up to 30% in the state enterprise will be placed with
investors. Authorities did not rule out a sale to a strategic
partner.

Dr Somkid said privatising the TTM would improve the agency's
competitiveness in the cigarette market, valued at 50 billion baht a
year.

Details of the listing plan will be set by Somchainuk Engtrakul, the
finance permanent secretary; Veerachai Tantikul, the TTM's chairman;
and Winont Saengman, the chairman of the TTM employees' union.

``The TTM will have to decide on its own whether it wants to bring
in a strategic partner. Many companies are interested in forming a
venture with the agency,'' Dr Somkid said.

Improving the TTM's efficiency was central to remaining competitive
in the market, he said, and expressed confidence that the planned
share listing would help boost operations and transparency for the
agency.

Companies mentioned in the past as potential partners for TTM
include British American Tobacco, Japan Tobacco, Philip Morris and
R.J. Reynolds.

While TTM remains one of the country's most profitable state
enterprises, the agency has seen its stranglehold on the cigarette
market steadily eroded in recent years by major foreign players.

Even with foreign cigarettes attracting tariffs and taxes of up to
370%, imported brands are now estimated to control up to 15% of the
overall market.

TTM managing director Suchon Watanapongvanich said current plans
call for the agency to be privatised in September, with the IPO held
in November.

Funds raised from the IPO will be partly used to finance the shift
in production facilities from Bangkok to Chiang Mai.

Currently, the TTM has assets of about 17 billion baht. Last year
the agency posted net profits of 5.63 billion baht on revenue of
42.6 billion, with a return on assets of about 32%.

Mr Suchon said the TTM was also moving forward with plans to produce
foreign cigarettes on behalf of overseas firms as a means of
maximising utilisation of existing production capacity.

With cigarette tariffs in the Asean Free Trade Area cut to just 5%
this year and scheduled to fall to 0% next year, TTM executives
acknowledge that the agency faces an urgent need to expand its
products and revenue sources in the face of growing foreign
competition.

Advising the TTM on its restructuring and privatisation is Arthur
Andersen.

Varathep Ratanakorn, a deputy finance minister, said the TTM also
planned to reduce imports of foreign tobacco leaf used for blending,
following recent advances in the quality of local products.

***


Thailand Tobacco Monopoly Plans Initial Share Sale in November

by Anuchit Nguyen
THAILAND;
Source: Bloomberg News, 2002-03-06Bangkok, March 6 (Bloomberg) --
Thailand Tobacco Monopoly, the nation's biggest cigarette maker,
plans in November to sell shares to the public for the first time to
raise funds to build a factory and help the government finance the
budget deficit.

The state-owned cigarette maker, which sells four of every five
cigarettes in Thailand, said it plans to sell a 30 percent stake to
local investors. The company did not say how much it plans to raise,
though part of the proceeds would be used to build a 10 billion baht
($229 million) cigarette factory.

Thailand Tobacco said it hired Arthur Andersen LLP for 74 million
baht to advise on the share sale. The company posted a profit of 5.6
billion baht in 2001 and sales of 42.6 billion baht.

The company, which controls all domestic tobacco cultivation and
cigarette production, has seen its market share shrink on rising
competition from British American Tobacco Plc, Philip Morris Inc.,
RJR Nabisco Holdings Corp. and other foreign companies after
Thailand opened the market in 1995.

The government is selling stakes in other companies after calling
off share sales this year in Telephone Organization of Thailand and
Communications Authority of Thailand when officials took longer than
expected to establish a new phone regulator.

Thailand also plans to sell shares in Port Authority of Thailand,
the nation's largest port operator, in the third quarter to finance
a budget deficit that's forecast to double to a record 200 billion
baht this year as the government accelerates spending to boost the
sagging economy.

The economy probably expanded at 1.5 percent last year, the slowest
growth since 1998, the central bank said.