The Stock Exchange of Thailand has threatened Dragon One Plc with delisting if it fails to meet the exchange's regulations by July 1 next year.

The warning came following Dragon One's conversion to a cash company upon the transfer of all its assets, liabilities and business operations to Diana Convenience Store Plc. It has also sold Diana Convenience Store to Netr Chantrasmi for Bt88.30 per share, or a total of Bt5.03 million.

A cash company is one that has no assets other than cash and its income is generated by investment in subsidiaries.

Dragon One listed on the stock market "through the back door" recently, by taking over Diana Department Store Plc. However, the SET requires it to reapply for listing due to the major change in its core business from operating department stores.

"To have its new business reapplied to the stock exchange, the new business must qualify according to the regulations of the exchange. Dragon One's securities will be traded on the SET, or the MAI [Market for Alternative Investment], based on a new business filing," the SET said yesterday.

"If Dragon One cannot make its business suitable for listing within nine months, then the board of the SET may order such securities delisted."

However, if Dragon One's new business meets the SET's requirements, then the holders of 65 per cent of its paid-up capital will be prohibited from selling their shares for 18 months to comply with the SET's silent period regulations, the exchange said.

Dragon One's stock closed yesterday at Bt1.86, down 8.82 per cent on the day.

The stock exchange has asked Dragon One to take part in an extraordinary meeting of the company's shareholders to be held on September 25, as several "significant items" are on the agenda.

One of them is the matter of approval for Dragon One's takeover of Application Hosting Services from Bunprasit Tangchaisuk - a person connected to the company - and IEC Business Partners. The deal is worth Bt269.98 million, and will be covered by the issue of 150 million warrants under an employee stock option programme. Dragon One expects its acquisition of Application Hosting Services will allow it to meet the SET's listing criteria.

It proposes to offer 117.6 million warrants, or 78.6 per cent of the issue, to Jrarat Pingclasai, the company's chief executive and its major shareholder.

The SET said Dragon One needed approval from at least three-quarters of the total votes of shareholders attending the meeting. Moreover, any move to veto the warrant issuance requires not more than 5 per cent of total votes.

Meanwhile, Jrarat was quoted by the Thai-language news agency Infoquest as saying that the takeover of Application Hosting would allow Dragon One to qualify for listing.

"I'm not worried," he said. "We acquire Application Hosting Services and the deal is advised by Ayudhya Securities. After the deal is done, Dragon One will qualify under the SET's listing regulations."