The Shin Corp deal is beginning to crack as negotiations are under way to bring in new partners to replace Pong Sarasin and Suphadet Poonpipat, who would like to walk away from deal, according to people familiar with the situation.

They said Boonklee Plangsiri, the chief executive of Shin Corp, was now wooing a new partner for Kularb Kaew Co Ltd, which owns 41 per cent of Cedar Holdings.

"The new partners must really have the financial clout to make the investment or must not look like a nominee for Singapore. There are talks that Samart Corp or Siam Cement have been approached to become a new partner," said one financial source.

But other sources said the board of Siam Cement had already rejected the offer.

Watchai Vilailuck, president of Samart Corp, also denied that his company would be involved in the deal.

"Where on earth can the company find money to finance the investment?" he said. "Indeed, we aren't interested in the telecom business due to the huge capital requirements."

Asked if the purchase were to be financed by a third party, which in turn would make Samart the third party's nominee in Kularb Kaew, Watchai said it was impossible that anyone would trust the company that much.

He also denied the possibility that his family was interested in the deal. "No way," he said. "We don't have that kind of money."

Cedar Hold-ings and Aspen Holdings - both controlled by Temasek Hold-ings of Singapore - are now tendering for the remaining 50.4 per cent stake in Shin Corp as part of the takeover, having bought a 49.6-per-cent stake from the Shinawatra and Damapong families for Bt73.3 billion.

The Shin Corp deal has sparked off an uproar and sent Prime Minister Thaksin Shinawatra's popularity plummeting as he is seen by many as selling Thailand off to Singapore.

Thaksin has dissolved Parliament and called for a snap election on April 2 in a move seen in some quarters as a ploy to avoid addressing the Shin Corp deal.

Temasek needs another Bt70 billion for the tender offer. People in the stock market believe that most shareholders of Shin Corp are likely to sell off the stocks to avoid the associated political risk.

Pong, Suphadej and other individuals have been brought into Kularb Kaew as shareholders to facilitate Temasek's takeover of Shin. However, Kularb Kaew has been viewed as acting only as a nominee for Temasek, which would like to circumvent the foreign ownership limit in its acquisition of Shin. Thai law prohibits a foreign company from holding more than 49 per cent in Shin.

Cedar Holdings is now capitalised at only Bt160 million. But in due time it is expected to raise fresh capital to somewhere between Bt10 billion and Bt30 billion to complete the takeover transaction. In this case, the shareholders of Cedar Holdings will have to pitch in new capital to support this gigantic recapitalisation.

Sources said Siam Commercial Bank, which holds 10 per cent in Cedar Holdings, had been caught in the web of complication surrounding the Shin deal, uncertain as to whether it would participate in the recapitalisation. If the bank agrees to proceed with the deal, it would have to contribute about Bt2

billion-Bt3 billion from its capital to maintain its 10-per-cent stake in Cedar Holdings.

Yesterday, Somsak Kosaisuk, one of the key five members of the People's Alliance for Democracy, which is rallying for the resignation of Thaksin, led a small group of supporters to protest the Shin deal at the Singapore Embassy.

Somsak handed over a letter calling for Temasek to drop the deal, otherwise his supporters would rally for a boycott of Shin's services and products.

Somsak vowed that he would return to the embassy again tomorrow, the last day of the tender offer for the remaining Shin shares.

Since March 2, Cedar Holdings and Aspen Holdings have been tendering for Shin stocks at Bt49.25 a share. They have set 4.30pm tomorrow as the deadline for them to "alter the terms of the tender offer" in case that there are incidents that might affect the status or the assets of Shin.

It is not clear what they mean by "altering the terms of the tender offer". But rumours in the market are that Temasek might call off the tender if there is a mass demonstration outside the Singapore Embassy, attempts to destroy Shin's assets or to boycott its products and services.

After the March 9 deadline, the deal is considered done.

People familiar with the deal could not confirm whether there is any similar clause or "put option", which would allow Temasek to terminate the deal with the Shinawatra and Damapong families in the event of unexpected incidents that affect the status or assets of Shin.

"Only the Shinawatras and Temasek know about this detail. But I believe the Shinawatras would never make a buy-back deal," said one financial source.

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