CAZ (Thailand) Public Company Limited (SET: CAZ) has clarified the details as required by the Stock Exchange of Thailand (SET). For additional information that the auditor mentioned in note 3 to the financial statements, which stated that one of the company’s customers, the main contractor for a construction project, had delayed payment may affect the company’s cash flow and liquidity. The questions are detailed as follows;
- Information about construction projects and such customers, credit term of payment, and the reason for receiving delayed payment from such a customer.
- Does this customer used as collateral or a short‐term loan from a financial institution – factoring loan? If it is taken as collateral as well, please clarify the related impacts.
- Adequacy of allowance for doubtful accounts, amounts already paid, remaining balance, and expected amounts to be received during various periods as agreed upon. Including measures to follow up on overdue payment, and the additional works that have to be delivered right of control to such a customer.
- Impact on financial status, liquidity, and current business operations and if payment is not received followed by agreed.
The company would like to further clarify in details as follows;
1.) The company has signed construction contracts with the main contractor PSEAL, SSING, and SET Joint Venture (UJV), consisting of Petrofac South East Asia Company Limited (Petrofac), Saipem Company (Singapore) Co., Ltd. (Saipem), Samsung E&A (Thailand) Co., Ltd. (Samsung) in the construction of the Clean Fuel Project (CFP).
The project is located in Chonburi Province. Since, CFP project began construction, until October 31, 2024, the company has signed a total of 4 contracts with UJV. The contract value and variation work orders totaling Baht 7,330 million, with a payment term of 45 days after receiving invoice.
Throughout the work period since construction began in 2019, UJV has been paid the full amount of each invoice and the payment period for each invoice was less than the overdue term payment of 90 days.
However, from Q2‐2024 onwards, UJV has begun to delay payments to the company. Resulted to, the company’s Condensed interim financial statement as of September 30, 2024, had overdue Trade receivables totaling of Baht 887 million, Contract assets totaling of Baht 682 million, Contracts liabilities totaling of Baht 200 million, Retention receivables totaling of Baht 113 million, and Backlog totaling of Baht 912 million (this amount has to be continue constructing works to comply with conditions of contract which the company unable to stop construction works).
In this regard, UJV has provided the information to the company of the reason for delay of debt payment because UJV is in the process of offering an increase into the contract by additional money of compensation with the project owner. And UJV informed that it expects to reach a conclusion from the project owner by the end of November or approximately mid of December 2024.
Meanwhile, the company has closely followed up and negotiated for debt repayment from UJV throughout the past period. However, UJV negotiated partial repayment of debt in order to use as operating expenses of the CFP project from October ‐ December 2024.
For the remaining debt amount, once the purpose of additional money for compensation to the project owner has been concluded and expected to be approximately the end of November 2024 or mid of December 2024.
After that, UJV will begin paying the company’s long‐standing invoices, a total of 3‐6 times. The scheduled payment plan will be sent to the company by UJV after an additional contract has been signed with the project owner, which UJV expects to occur from December 2024 to early January 2025. The timeline of UJV payment plan is set to be within 3‐6 months starting from January 2025 onwards.
2.) Based on the current situations, UJV is in the process of implementing several parties of the project to finalize its plan to repay all outstanding debts to the company, which will not lead into losses for existing outstanding debts.
The company therefore considers to wait for the conclusion of UJV and the project owner which UJV’s provided and expected to occur within November to mid of December 2024.
However, the company took legal action against all related parties to require UJV to pay all outstanding invoice amounts followed by the construction contracts by filing a lawsuit in the South Bangkok Civil Court in September 2024.
If the conclusion between UJV and the project owner fails to comply with the negotiation. The company will take legal action in a timely manner.
3.) At present, the company has managed cash flow to solve liquidity problems by reducing expenses, especially CFP project expenses, and requesting negotiations to postpone payment of debt to its trading partners. As well as requesting assistance from other clients to repay project debts earlier than normal credit terms to ensure continuous business operations in all projects, as well as loans to financial institutions that are used as working capital for current projects.
Moreover, in terms of credit facilities with a financial institution, the company has used UJV’s invoices as collateral for factoring loans by issuing short‐term promissory notes for the operation of the CFP project.
However, when the company’s factoring statements with the financial institutions were delayed, the company requested an extension of the repayment period and the payment plan to the financial institution. Currently, it is under consideration, which is expected to be approved by December 2024.
In summary, from the current situation of delaying the payment of UJV’s debts, it has affected the company to take various actions as mentioned above in order to ensure the continuity of the company’s business operations. Regarding UJV’s provided information, the company plans to wait for the conclusion results of UJV and the project owner, which expect to occur within November to early December 2024. However, when the company receives additional progression, the company will inform SET further.
