The company said in a filing to the Stock Exchange of Thailand that its board had approved the change and required SGF to return at least 8 per cent of the principal every quarter.

The interest rate for the loan will be based on the minimum lending rate quoted by Siam Commercial Bank.

EWC was responding to a recent request by the SET to explain why the company had allowed SGF to extend the repayment period. EWC recently accepted two promissory notes from SGF for Bt284 million and Bt216 million - due on June 15 and June 16, respectively.

SGF's managing director, Theeraphat Koisukkro, raised the issue to extend the due dates, EWC said in the filing.

"The reason that we accepted the proposal of SGF, even though SGF could not meet EWC's requirement that a commercial bank was needed to provide an aval [third-party guarantee] for the loan, as it has never done such a practice before, is because SGF intended to use the proceeds to expand its business," EWC said.

EWC said that at that time it considered the request to extend the loan repayment period and decided it was good for the company as it would receive a relatively high interest rate and it would get its money back on a quarterly basis.

Besides, SGF has posted steady profits and this made EWC believe that SGF was in a position to service its debts, EWC said.

"The company considered the risks and benefits that we could have in investing in a new project, but we could not have used all of that money at one time," EWC said.

But by continuing to employ surplus liquidity in the form of a loan to SGF and receiving income every three months, the company could benefit from higher interest than what commercial banks are paying on savings, EWC added.