No dividend, no deal
The fact that TMB Bank is unlikely to pay a dividend for at least three years was the main reason cited by the Vayupak Fund for not subscribing to the bank's newly issued shares.
"Vayupak Fund's negotiations to buy TMB Bank's new shares at a discount failed. It couldn't subscribe to the bank's shares at the offering price of Bt3 because TMB Bank has accumulated losses and the fund wouldn't be paid a dividend for at least three years. This would have a negative impact on the returns of the fund's unit trusts," a source in the brokerage community said.The bank plunged into the red in 1998, only climbing back into the black in 2004. However, it has yet to pay shareholders a dividend, and looks unlikely to do so soon. "At the moment, the Vayupak Fund has capital of Bt34 billion available for investment. Around Bt4 billion to Bt5 billion of the total capital is held in cash, sufficient for an investment in TMB Bank. But the deal failed due to pricing. The fund must put its unit trust holders' interests first," the source said. After the negotiations failed, the Finance Ministry itself decided to exercise its right to TMB Bank's capital-increase shares by using loans of Bt3 billion from the Government Savings Bank, backed by an 11-per-cent stake in MCOT Plc to finance the share subscription. TMB Bank is to issue 3.22 billion capital-increase shares to existing shareholders at a ratio of one new share for every 4.75 shares held as of April 7, priced at Bt3 each. Meanwhile, MFC Asset Management president Pichit Akrathit said TMB Bank plans to sell a stake in MFC to the Social Security Fund at Bt21.90 per share as part of its plan to reduce its stake from 13.68 per cent to less than 5 per cent. The bank wants to reduce its holding in MFC to minimise conflict of interest, as the bank and MFC plan to link up to do business together, he said. TMB Bank is also the major shareholder in TMB Asset Management. Siriporn Chanjindamanee The Nation
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