Hot Pot is the prime candidate for a deal with Daidomon Group, said a source in the investment banking community. Phatra Securities is serving as the company's financial adviser.

Hot Pot has been restricted in widening its market share due to a shortage of capital, the same source said.

"The partnership with Hot Pot would be a win-win situation for both parties. Daidomon's brand would remain operating as a barbecue restaurant chain," the source explained.

Daidomon's major shareholder Wichai Tongtaeng said that negotiations with MK Suki Restaurant, the country's largest sukiyaki chain, had not progressed because of different management styles.

The company is talking with other firms engaged in the food business and will reach agreement on a deal over the next three or four months, he said.

Wichai said that the company's partner would buy the part of Daidomon's shares held by his family, while Daidomon in return would take a sizeable stake in the partner.

Wichai owns more than 70 per

cent in Daidomon and his daughter Wion Tongtaeng holds another 19 per cent.

"We expect that we would complete a business rehabilitation plan over the next three or four months and we would later seek a conclusion about the partner.

"If we sell shares to the partner, we would sell only a portion of the holding as we want to solve the company's problems," he said.

Ahead of reaching a conclusion about the partner, the company would turn itself into a holding firm, said Wichai.

Meanwhile, the company reported to the SET that the Central Bankruptcy Court has set a hearing for the plan administrator to conduct its witness presentation on September 25 and has scheduled a hearing for opponent creditors to conduct their witness presentation on October 2.

The company's second-quarter net loss narrowed to Bt234.12 million from a Bt151.45 million net loss in the corresponding period last year.

It then saw its net loss in the first half this year lowered to Bt151.25 million from Bt430.33 million in the same period the year before.

Wichai took over the financially ailing firm in recent years. Daidomon's stock is under threat to be delisted from the stock market after its shareholders' equity plunged into negative territory.

In 2005, the Securities and Exchange Commission filed a criminal complaint against three former executives of Daidomon with allegations of cooking the books and misleading the public about the company's true financial condition

The three executives listed false revenues and expenses in financial statements for full-year 2002 and the first and second quarters of 2003.