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BMCL to sell subway given the right price
Charoen Kittikanya, Bangkok Post (22 Jul 2004)

BANGKOK, THAILAND: Bangkok Metro Plc (BMCL), the subway concessionaire, said yesterday that it would sell the underground public transit system to the state immediately _ given the right price.

``We are ready to deal and have no desire to be locked into a long dispute with politicians,'' said Dr Sombat Kitjalaksana, BMCL's managing director.

``It's only a question of how long it will take for the authorities to show that they are truly ready.''

His latest comments showed that the subway concessionaire has toned down its initial opposition to the proposed state buyout.

The Transport Ministry, which oversees the Mass Rapid Transit Authority of Thailand (MRTA), months ago announced its intention to buy back the system in order to better integrate existing and future mass transit services.

State control would facilitate the introduction of cheap, subsidised fares and facilitate the integration of the city's existing mass transit systems with 400-billion-baht in proposed subway and skytrain extensions, say government officials.

According to Dr Sombat, the company has thrown in the towel in its dispute with the MRTA over the state's claim that it has the right to buy up to 25% of BMCL shares at par value.

Ch. Karnchang, the majority shareholder, has argued that the share purchase rights were only valid for 12 months after the MRTA awarded the 25-year subway contract to BMCL. That means the state's rights to the shares expired in 2001.

Despite the government's stated intention of going ahead with the buyout plan, BMCL said that it would continue with business as usual.

``Our business plans, including the initial public offering and further investment to improve the subway's service to the public will go ahead as planned,'' said Dr Sombat.

BMCL's shareholders yesterday agreed to raise some 900 million baht by selling 300 million new shares at three baht apiece to existing shareholders, including leading contractor Ch Karnchang.

As a result, the company's registered capital will increase to 7.35 billion baht from 7.05 billion baht.

Ch Karnchang owns 52% of BMCL. Property firm Natural Park holds a 30% stake, followed by creditor banks, led by Krung Thai Bank, which own 17.5%.

The 20-km subway, which opened on July 3, has been carrying 210,000 passengers per day, a figure which exceeds its initial target of 200,000. It expects its daily ridership to reach 250,000 by the end of this year.

BMCL's revenue is expected to hit two billion baht in 2005, up from the 700 million forecast from five months of operations this year.

Some 90-95% of revenue comes from fares and the rest from advertising and rental fees.

According to Dr Sombat, proceeds from the new capital increase would be used to improve the subway's information services and buy more trains.

``Given better-than-expected passenger numbers, we are now looking at buying four or five new trains. A big portion of the proceeds might then be allocated to pay for that, as it will take the manufacturer about a year to fill the order.''

Dr Sombat said the IPO plan might be delayed from the third quarter of this year, as the company wants to see clearer figures for fare revenues and commercial development.

Promotional fares are now 10 baht for any trip. From mid-August until next July, fares will be 12-31 baht. Fares will rise to 14-36 baht in July of next year.

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