Dec. 28--Thaicom Plc announced plans yesterday to issue debentures worth seven billion baht to retire foreign-currency debts.

Chief executive Arak Chonlatanon said the proceeds from the debentures would be used to pay off all of the satellite operator's foreign-currency debts in a bid to eliminate risks stemming from exchange-rate fluctuations.

Thaicom currently has US$220 million in debts that will fall due over the next three years. It pays interest of 75 million baht every quarter.

The company incurred a foreign-exchange loss of 110 million baht in the first quarter of this year.

"We plan to use all of the proceeds to retire our foreign loans incurred from Thaicom 4 and Thaicom 5 satellites in order to eliminate the risk from exchange-rate fluctuations, reduce the cost of funds and enhance business management," Mr Arak said.

He said one tranche of debentures would have a maturity of three years, with an annual interest rate at 5.25 percent.

The second tranche of five-year debentures would pay a 6.15 percent interest rate annually. The minimum subscription amount will be 100,000 baht.

The company will pay interest every three months.

The debentures, rated BBB+ with a stable prevailing trend by Tris Rating, would be offered to individuals and institutional investors from Nov 2-5 through Bangkok Bank, Kasikornbank, Krung Thai Bank, TMB Bank and Standard Chartered Bank (Thai).

Mr Arak also said that Thaicom had already sought overseas loans for funding of a new satellite to replace Thaicom 1 and Thaicom 2, whose service lives are scheduled to end next month and in the middle of next year respectively.

He did not elaborate on the investment budget or sources of funding.

The Thaicom 1 satellite has 15 transponders while Thaicom 2 has 10 transponders. The company has already transferred all Thaicom 1 customers to its iPSTAR and Thaicom 5 satellites.

Thaicom 5 has 25 C-band and 14 Ku-band transponders, and bandwidth usage has now reached 75 percent.

Mr Arak urged the Information and Communication Technology Ministry (ICT) to approve the rental of a satellite to provide services for its Thaicom 1 customers.

If Thaicom cannot obtain approval from the ministry by early 2010, its business would be greatly affected by the delay in terms of revenue and customers, he said, adding that the government would therefore be affected by a smaller share of revenue.

Thaicom had been in talks with several satellite operators in Asia, Europe and the United States to either rent a satellite or take over a used one.

An option to purchase a new satellite is now unlikely because the long process could not accommodate increased demand for bandwidth rental.

However, Mr Arak had said earlier that Thaicom would decide to purchase a new satellite if the government agreed to lower concession fees, extend the concession term beyond the existing 30 years and scraps the rule requiring it to have a backup satellite.

Thaicom shares (THCOM) closed yesterday on the SET at 7.90 baht, unchanged, in trade worth 12.77 million.

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