Published on November 29, 2005
The Thaksin administration faces the possibility of another setback today if the Supreme Court rules that founder Prachai Leophairatana should be given first option to buy shares in Thai Petrochemical Industry Plc (TPI) rather than PTT Plc and other government-backed investors. The court’s decision has already been made and delivered in a sealed envelope to the Central Bankruptcy Court, where it will be read today.
The government suffered a blow earlier this month when the Supreme Administrative Court, acting on a petition by civic and consumer groups, blocked the Bt32 billion-Bt35 billion initial public offering of Egat Plc, pending a review of two decrees.
There were jitters on the stock market yesterday that the ruling might go in favour of Prachai, who petitioned the Supreme Court that the Leophairatana family be given the right to buy any new and existing shares of TPI held by creditors before strategic investors were allowed to step in Bangkok Bank’s stocks fell 1.5 per cent, or Bt1.50, to Bt98.50 on fears over its loan exposure of more than Bt40 billion to TPI. According to the Dow Jones news service, TPI’s shares rose by Bt0.15 to Bt6.45 in a partial correction of its 4.6-per-cent fall on Friday, “though investors still fear the court ruling [today] may change allotment of shares to favour former owners versus new partners”. If the Supreme Court rules against Prachai, the government-backed debt-restructuring plan for TPI will proceed with PTT and its strategic partners buying 17.55 billion new shares at Bt3.30 apiece, and finally achieving the takeover of Southeast Asia’s largest petrochemical complex after more than seven years of legal wrangling. A lawyer involved in the case said that if the Supreme Court ruled in Prachai’s favour, TPI’s plan administrator would have to suspend or delay the debt-restructuring plan. The plan’s timeframe has already been extended from the end of this year to 2006, he added. TPI has attempted to restructure its massive debt – originally totalling nearly US$3 billion (Bt124 billion) –since 1997, but former owner and chief executive Prachai delayed the process by fighting tooth and nail through the courts to retain control of his company. To bring an end to the saga, the government intervened last year by appointing a new plan administration team. The team recommended bringing in strategic partners to pull TPI out of bankruptcy by selling a major stake to PTT Plc and its partners – the Government Savings Bank, Government Pension Fund and state-run Vayupak Fund I – who will each buy a 10-per-cent stake. All the TPI shares available are expected to be sold by December 13, raising up to Bt57.9 billion to repay debt. Somluck Srimalee The Nation
Post your comment to this story here