Thai Banpu shares fall after court order on $1 billion damages

(Reuters) - Shares in Banpu Pcl BANP.BK plunged 11 percent on Friday after a Thai court ordered the country's top coal miner to pay about $1 billion in damages to its former partners in the Hongsa power project in Laos.

The news prompted many analysts to downgrade Banpu shares and cut profit forecasts on expectation that the damages will affect the company's earnings outlook and profit contribution from the Hongsa project will be lost due to a prolonged delay.

By the 0530 GMT midday close, Banpu shares had lost nearly 10 pct, the biggest daily fall in almost a year. The stock slipped as much as 11 percent to a morning low of 390 baht. The main stock index .SETI was up 0.19 percent.

Banpu shares, the biggest loser among Thai big-cap stocks, have fallen nearly 30 percent in the past 12 months due to the weak outlook of coal prices.

"This unfavorable outcome will have a significantly negative impact on its share price, given that the market had expected the case to have no effect on the company," said Suwat Sinsadok, analyst at CIMB Securities (Thailand). The broker cut Banpu to "underperform" from "neutral".

The Civil Court ordered Banpu and its subsidiary on Thursday to pay Siva Nganthavee and his group damages of 4 billion baht ($129 million) with 7.5 percent interest per annum. It awarded further damages for loss of opportunity of 860 million baht per year for 2015-2027 and 1.38 billion baht per year for 2028-2039.

According the Reuters calculation, the total damages are estimated at about 33 billion baht ($1.07 billion).

Businessman Siva Nganthavee and his group filed a 2007 case against Banpu, alleging the company had misled them by entering into a joint agreement in order to secure information about the group's coal mine contract and a feasibility study for the Hongsa project.

Nganthavee group alleged that Banpu misinformed the Laos government, resulting in the group losing its mining contract. The group had sought damages totaling 63.5 billion baht ($2.05 billion), Banpu said in a statement.

Banpu, also Indonesia's fourth-largest coal miner, said it would appeal the ruling. It said the court order would not affect the Hongsa project, which is operated by a joint venture firm Hongsa Power Co Ltd.

Banpu owns 40 percent of Hongsa lignite power plant in Laos, a $3.7 billion project due to begin operations in 2015. It said construction of the 1,800-megawatt power plant was proceeding.

Banpu, already hit by a sharp drop in global coal prices, slashed its five-year investment plan and issued a profit warning on July 24.

Coal prices have steadied after sliding for months, giving relief to miners and traders as fewer Chinese buyers try to lower agreed contract prices, but prices may stay weak as some customers are still hoping to defer shipments.

Banpu is expected to post 2012 net profit of 12.25 billion baht, according to Thomson Reuters I/B/E/S. This compares to 20 billion baht it earned in 2011.

($1 = 30.9050 Thai baht)

http://in.reuters.com/article/2012/09/21/us-thailand-banpu-shares-idINBRE88K08L20120921