The price is higher than Ratchthani's stock price, which closed yesterday at Bt35.25, having fallen 1.4 per cent. The company warrant, Ratchthani Leasing warrant 3, jumped 20 per cent to Bt0.30 yesterday.

The shareholding increase in Ratchthani will make Siam City Bank subject to tendering requirements. However, the bank said it would ask the company to exempt it from this as it had no intention of taking over the firm.

According to the statement, Ratchthani informed the Stock Exchange of Thailand (SET) it would issue 486 million new common shares at Bt1 par value, of which 265 million would be sold to Siam City Bank at Bt1.15 per share.

Of the total share increase, 132.5 million will be set aside for the conversion of warrants, 132.5 million of which Ratchthani will offer to the bank free at a ratio of two new common shares to one warrant.

Ratchthani will also allot 80.5 million new shares for conversion of warrants to be given to its existing shareholders at the ratio of five existing shares to one warrant, also with a three-year maturity. It will allot eight million new shares for conversion of existing warrants by holders of Ratchthani Leasing warrant 2 and Ratchthani Leasing warrant 3.

"The company will use the working capital for operations, withdrawing approximately 30 per cent of its short- and long-term leases and expanding auto leases by 70 per cent," said Ratchthani director and managing director Kovit Rongwattanasophon in the company statement.

The company announced its registered capital would be increased from Bt500 million, with paid-up capital of Bt401.52 million, to Bt986 million.

Siam City Bank executive vice president Amporn Ruangprasertkun, said the bank's board of directors had decided to increase its investment in Ratchthani due mainly to the company's good performance.

The bank is satisfied with its new shareholding in the company, which will soon be 40.33 per cent.

There are no plans for expanding its holdings in the company.

Siam City Bank's percentage of shares in the leasing firm has been endorsed by the Bank of Thailand.

Amporn added that the move was a win-win deal. The bank will act in accordance with its universal-banking concept and generate more income from the subsidiary, while Ratchthani will benefit from the bank's network across the country, she said.

She said the purchase isconditional on approval by Ratchthani shareholders of the bank's exemption from a tender offer. Siam City wants to be partners with the firm.

Somruedi Banchongduang

The Nation