Hemaraj targets tourists with Bt10bn complex
Koh Larn chosen because it is ‘not too large and also has proximity to Pattaya
Sawasdi Horrungruang, founder of Hemaraj Land and Development Plc and now chairman of the advisory board, is geared the listed real estate firm towards the upcoming launch of a Bt10-billion entertainment complex on Koh Larn near Pattaya, to serve an expected increase in the number of both domestic and international tourists.
The project, undertaken by Million Island Co Ltd, a wholly owned subsidiary of Hemaraj, was aimed as a new link to destinations in Hua Hin. Getting to Hua Hin from Koh Larn off Pattaya by boat takes an hour, compared with four hours by road.
“This will be a choice for touristswho travel to Pattaya, Koh Larn and then towards Hua Hin,” said Sawasdi. He said reasons for choosing Koh Larn is that it’s not too large an island, offering serenity and proximity to the shore of Pattaya.
In addition, he foresaw tourist arrivals on the island of nearly 10,000 people a day on weekends and 6,000 a day on average. This could rise to 12,000 a day if there were more facilities.
Million Island Co Ltd bought 228 rai, half of Koh Larn’s total area, for Bt2 billion from hotel developer Wicha Baopimpa in Pattaya seven months ago, Sawasdi said. There will be four phases, with construction expected to start next year.
The first phase will include a marina, hotels and boat docking. A ll four phases
are scheduled to be completed in thenext five years. Now, he said the company was selecting a foreign consulting firm to design the landscape. Roughly, he said the project would be in a vertical shape, comprising an aquarium, 3-, 4- and 5-star hotels, condominiums for sale,
restaurants, a walking street, pavilions, high-end shopping areas and a safari park.
On the island,small electric and cable cars would be the only transport options.
“All the projects I’ve done started from a dream and then transformed onto paper before
being materialised,” he said. Since coming out of insolvency in February, Sawasdi, 71, has dreamed up another project and has been thinking of a way for it to happen. He aims to differentiate the huge investment complex on Koh Larn not only from rivals but from his former projects that left mounting debts of almost Bt100 billion on his shoulders.
The financial crisis of 1997 brought the collapse of Sawasdi’s steel businesses – NTS Steel Group and Nakornthai Strip Mill (NSM) – which were flooded with debts once the baht went from Bt25 to Bt50 against the US dollar. NTS Steel Group eventually for med a joint venture with a subsidiary of SCG and changed its name to Millennium Steel before being sold to India-based Tata Steel. NSM has been merged into G Steel, owned by Somsak Leeswadtrakul. Sawasdi and his family members retain a combined 14-per-cent stake, or 1.35 billion shares (as of August
27), in Hemaraj, which is one of the businesses he founded. For the Koh Larn complex,
Sawasdi said Hemaraj would initially be a majority shareholder, but th is may be diluted in the future to such others as Wicha, who has offered to hold a 20-per-cent stake in Million
Island, and other potential strategic partners.
In the first stage, Million Island will use bank loans to finance the complex, which will be guaranteed by Hemaraj, while some funding would come from Hemaraj’s cash
flow, Sawasdi said. “We do not fear creating new debts, as we have learnt a lesson from
the past. The property business is not like heavy industry, which must wait for the last baht before the operation can start. For the property business, we can gradually invest in
a project phase by phase, as well as generating income in parallel in a bid to finance the other phases.” He proposed a new way of raising funds to finance projects: setting up a tri-party group consisting of the company, creditor and debtor’s customers to reassure debts are repaid.
Once the company has an income on a monthly basis, this will first be deducted to pay off the principal sums and interest to banks, who are the creditors. The balance should be given to the company.
Source : The Nation 17 September 2012