Page 45 - PSTC - One Report 2023 (EN)

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Power Solution Technologies Public Company Limited
3) Financial Covenant Risk with Banks:
As of December 31, 2023, three subsidiary companies, each holding 100% , failed to maintain certain financial ratios stipulated annually in loan agreements with financial institutions;
Company name
Aran Power Co., Ltd. *
Condition
Year 2023
Solar Go Green Co., Ltd
Big Gas Technology Co., Ltd.
Note:
• Debt to Equity ratio (D/E ratio), not exceeding 2.0:1 time -2.90 • Debt Service Coverage Ratio (DSCR), not less than 1.1:1 time -0.01 • Debt to Equity ratio (D/E ratio) not exceeding 1.75:1 time 0.20 • Debt Service Coverage Ratio (DSCR), not less than 1.1:1 time 0.86 • Debt to Equity ratio (D/E ratio), not exceeding 1.0:1 time 0.26 • Debt Service Coverage Ratio (DSCR), not less than 1.2:1 time 0.18
Indicates that *Aran Power Co., Ltd. is categorized as assets held for sale in the financial statements
As of December 31, 2023. Subsidiaries unable to adhere to specific restrictions outlined in loan agreements include Aran Power Co., Ltd, with a total loan amount of 250 million baht (outstanding debt of 29.48 million baht),Solar Go Green Co., Ltd, with a total loan amount of 40 million baht (outstanding debt of 4.14 million baht), and Big Gas Technology Co., Ltd, with a total loan amount of 320 million baht (outstanding debt of 229.31 million baht).The three subsidiaries have notified the bank of the circumstances preventing them from maintaining certain financial ratios outlined in the loan agreements. Consequently, in December 2023, all three subsidiaries received concessions from the bank regarding the maintenance of financial ratios as per the loan agreements, subject to annual review by the bank. Simultaneously, the companies are in negotiations to adjust various financial ratios to better align with current operating conditions.
However, despite ongoing negotiations to align financial ratios with current operating conditions, all three subsidiaries still require concessions on the mentioned ratios. There remains a risk that they may fail to maintain the financial ratios stipulated by financial institutions in the future. In the event of loan recall by financial institutions, the companies have secured short-term loan facilities to repay approximately 350 million baht and anticipate cash flow from operations of about 50 million baht, which is sufficient to settle the debts. However, financial institutions typically review long-term loan facilities with the subsidiaries annually, with a low likelihood of loan recall. Furthermore, the companies anticipate that once the COVID situation subsides, the subsidiaries’ operations will regain full efficiency, leading to improved operational performance. This improvement is expected to enable all three subsidiaries to maintain the financial ratios as per the terms and conditions in the future.
4) Fluctuations in Interest Rates
The Company may be vulnerable to rising market interest rates. Thus, the Company has short- and long- term financing from financial institutions, which may affect the Company’s financial costs. Nevertheless, the Company plans to consider the impact on fluctuating interest rates in market conditions where interest rates are likely to rise and will enter into a fixed-rate contract using financial instruments and/or providing a source of money with a lower interest rate than in the original credit limit contract.