Even if Picnic's shareholders approve the recapitalisation plan at a March 21 meeting, there is a only a slim chance for the cooking gas manufacturer's fund-raising effort to succeed, Suthichai Chitvanich, the SET's executive vice president, told reporters yesterday. He cited the offering share price of Bt1 a share, which is far more than the current market price of Bt0.52.

According to the company's capital-increase plan, it would sell one share to every two that existing shareholders own. Picnic expects to fully settle its overdue bills of exchange (B/Es) even if only 34 per cent of shareholders exercise their right to buy 510 million shares.

 However, at least one minor shareholder has expressed doubts about the viability of the capital increase plan. He noted that the company's shareholder meeting on March 2, at which the capital increase plan was the top agenda item, failed to make a quorum to vote on the scheme. He said that the lack of a quorum might imply that Picnic's major shareholders had already dumped their holdings.

 Picnic last year plunged into a net loss of Bt3.06 billion last year from a Bt234.9 million net profit in 2004, mainly because it was forced to restate its financial statement. In the 2005 balance sheet, the company had current liabilities that were Bt1.7 billion more than current assets.

 Suthichai said that if Picnic failed to raise funds, it would depend on Picnic's creditors whether they would force the company into bankruptcy or pursue other legal avenues.

"They can sue Picnic [and push it into] bankruptcy. They can ask Picnic to go into rehabilitation. Also, they can move to confiscate Picnic's assets. They must follow the legal process if Picnic fails to raise funds," said Suthichai.

Picnic recently said that four asset-management companies had already filed lawsuits against the company, demanding that it repay debts it incurred from B/Es worth more than Bt220 million. Additional creditors are expected to follow in the four asset-management firms' footsteps as the company has about another Bt1.8 billion in debts, almost all of which are B/E-related.

The cooking gas firm became a listed company when it took over B Grimm Engineering Plc, a company that had languished in the Stock Exchange of Thailand's rehabilitation sector since the financial crisis. The stock completed the business rehabilitation process on August 5, 2002.

The SET's executive vice president said that although 34 per cent of Picnic's shareholders might exercise their right to buy the new shares, the company would not have any money left over to expand.

Separately, Suthichai said that the SET was satisfied with Finansa's clarification about its intra-day transaction in BFIT Securities' convertible debentures. He said if the shareholders remained in doubt, they could question Finansa's executives at its next shareholder meeting.

Commenting on the Eastern Wire Plc (EWC)'s case, he said that the SET was waiting for the company to explain why it recently extended a Bt500 million loan to Siam General Factoring Plc (SGF), even though lending is part of the company's normal operations.

The SET questioned why Eastern Wire used proceeds from a recent capital increase for a purpose not aligned with the fund-raising plan that was announced to the public.

Piyarat Setthasiriphaiboon

The Nation