The Stock Exchange of Thailand (SET) has demanded more information from Power-P Plc after its auditor was unable to reach a conclusion on its first-quarter financial statement.

The company must provide clarifications of five issues before the end of this month.

The issues are the cancellation of a share-purchase agreement with LVC Development Co Ltd (LVCD); the cancelled construction of the World Gas (Bang Pakong) project; the company's progress in restructuring debts with commercial banks; its failure to construct foundations for building on land in the North Park project; and its failure to register land as collateral for money advanced to Merge Engineering for work on the Friendship Village and Garden project.

The first questions relate to Power-P's recent agreement to take the entire stake in LVCD at a cost of Bt119.9 million. The deal flopped after the seller allegedly failed to comply with the conditions of the agreement. However, Power-P agreed to convert its partial payment for the shares, of Bt95 million, into a loan to LVCD, which will be repaid in 12 instalments between June 30 and May 11, 2007.

The SET asked Power-P to provide the date upon which the process of due diligence for buying LVCD's shares began, the date upon which the outcome was received, and the result of the process.

It also sought directors' opinions of the conversion of the LVCD investment into the LVCD loan transaction, an explanation of why LVCD's shareholders are unable to make one single repayment for the Bt95-million loan, and conditions for the 12 repayment instalments.

The SET also asked Power-P to identify the date on which its name first appeared on LVCD's list of shareholders and the date on which the list was expected to revert to the names of the previous shareholders. Also, it asked whether the reversal date was in accordance with payment conditions.

The SET asked Power-P to explain why the construction of the World Gas (Bang Pakong) project was cancelled and why the accumulated amount of income and cost recognition from 2005 and the first quarter of 2006 was Bt81.22 million and Bt54.2 million, respectively.

Power-P was asked to identify the parties who defaulted on the contract and the reason why the contract was broken without any penalty charges.

The SET also wants to know why Power-P allowed World Gas to pay for construction already completed in seven instalments instead of one single repayment.

The SET also sought explanations from Power-P regarding a subcontract agreement it reached in December 2005 with Merge Engi-neering, related to the Friendship Village and Garden project. Under the agreement, Power-P paid 15 per cent of the project's value, or Bt12.38 million, in advance to Merge so that it could perform the subcontract work. For its part, Merge put up a parcel of land as collateral.

The SET wants to know why Power-P has not registered the collateral with the Land Department.

Regarding the North Park project, the SET asked Power-P to provide an assessment of "the opportunities and effects to the company" in the case of it defaulting on its agreement by refusing to construct foundations for building, and a local bank has to pay a penalty fee. It asked for the names of the counter parties and their relationship with Power-P.

Furthermore, the SET asked Power-P to identify its remaining operational projects, to describe their status, and provide details of its policies to protect it against the risks of project cancellation.

Siriporn Chanjindamanee

The Nation