As Covid-19 pandemic triggered the global economy into deep recession and many businesses have been disrupted, “Cash is the King” has returned. To prevent the company from closing down, cash and cash flow become the most important factor to run the business, for the safe and sound operation.
In order to maintain liquidity and increase the company’s cash flow, Central Pattana Public Company Limited (CPN) decided to dispose of 2 assets for a total amount not exceeding 5,672 million baht to CPN Retail Growth Leasehold Reit (CPNREIT).
The assets that CPN will sell to CPNREIT comprise 1) Central Marina Project, with leasehold rights over immovable properties for a term of approx. 15 years in which the leasehold rights shall expire on 30 April 2035, and 2) CentralPlaza Lampang Project, with leasehold rights over immovable properties for a term of 21 years in which the leasehold rights shall expire on 16 December 2041.
Regarding the advantages, the total size of CPNREIT’s assets will get bigger, prompting the beneficiary to receive more benefits, as well as return.
Meanwhile, CPN, in the short-term period, will earn an extra cash of 5,672 million baht, in which supply for future developments in accordance to the company’s expansion plan once Covid-19 outbreak is controllable.
The disposal of assets to CPNREIT also provided CPN the overwhelming opportunities for merger and acquisition (M&A) amid the ongoing pandemic, a chance to get “high quality products at cheap prices”.
Lastly, CPN will have adequate working capital in case the situation gets worse.
Even though the government has not imposed city lockdowns during the coronavirus new wave, it still has little effect on CPN. As the pandemic keeps travelers, both Thais and foreigners, away from travel, CPN’s Central Patong in Phuket has to temporarily shut down from Feb 1 onwards. There are 4 CPN’s shopping centers located in Phuket –Central Festival Phuket, Central Phuket Floresta, Central Patong and Porto de Phuket–.
In conclusion, because of Covid-19 and its consequences, to survive and preserve its financial position, CPN has to launch whatever plans to increase the company’s cash flow.
Well…cash is truly the king.
Rumor has it that CPN is considering disposing of 2 more assets to CPNREIT including CentralPlaza Suratthani Project and CentralPlaza Ubon Ratchathani Project.