Dragon One Plc will discuss with the Securities and Exchange Commission and the Stock Exchange of Thailand (SET) the criteria that will be applied to the settlement of the company's legal status.

President and CEO Jrarat Pingclasai said yesterday the talks would take place after the company files with the regulators a statement that it is qualified to retain listed-company status following the acquisition of Application Hosting Services.

The SET earlier stated that the company had not met the qualification for listing because it had no core business and was categorised as a cash company after it transferred assets, liabilities and all business operations to Diana Convenience Store (DCS), and also sold DCS shares to Netr Chantrasmi. The company's stock will be delisted from the stock market if it fails to meet the criteria by July 1 next year.

A cash company is different from a holding company. Though both earn income from their subsidiaries and affiliates, the former has only cash assets while the latter has other types.

Jrarat recently took over DCS, a financially ailing listed company, and renamed the company as Dragon One.The acquisition of Application Hosting Services is subject to approval by three-quarters of shareholders, who meet on September 25.

"Our case is new for the stock market and there is no rule for this type of business," Jrarat said. "The regulators cannot apply the pure rules for either newly listed companies or rehabilitated companies to Dragon One's case."

Dragon One has already met listing requirements, including paid-up capital of at least Bt300 million, at least 1,000 shareholders, and accumulated net profits of at least Bt50 million over three years, if Application Hosting Services is taken into consideration, he added.

However, Jrarat said the SET should not apply the silent period, which is typically used for newly listed companies, to Dragon One as it is not a newly listed firm.

According to SET rules, a silent period prohibits major shareholders from selling their shares and securities during the first six months after listing. They are permitted to sell only a maximum of 25 per cent of the locked-up shares every six months thereafter.

"I don't want the SET to use the silent period for Dragon One's case as it is not a newly listed company. I'm satisfied with a silent period of only 30 per cent of paid-up capital in case that it is applied to Dragon One," he said.

Jrarat once held 76 per cent of DCS - now Dragon One - after completing the tender-offer process for the company. He

now owns about 35 per cent.

"If I did not sell a portion of my shares, the company would not be able to meet the SET's criteria, requiring at least 1,000 shareholders," he gave as the reason behind the sharp decline in his shareholding.

He added that he had invested Bt200 million in Dragon One and obtained Bt100 million from the share sale.

He confirmed that he would keep his stake in Dragon One, though he would not manage the company.

Dragon One has an aggressive plan to acquire a sizeable stake in an information technology company every month. Jrarat said the company was poised to take over three more firms after the Application Hosting Services deal is completed. Proceeds to finance the acquisition plan will come from several channels, including the allocation of new shares.

"Mergers and acquisitions are the fastest way to expand business," he said.

Jrarat also has an ambitious goal to place Dragon One's stock on the list of foreign fund managers. The company's market capitalisation will rise to about Bt10 billion over the next three years.

According to the fund managers' criteria, they can invest in stocks with a market cap of more than US$100 million (Bt3.7 billion) and where at least 100 million shares are traded daily.

Dragon One plans to issue 200 million new shares through private placement at a price not less than Bt2.50 each. Jrarat said this stock would be offered to both foreign and local funds. He added that the offering price was far higher than the current market price because the selling price is less than the book value when Application Hosting Services and the three targeted firms are included.

Oranan Paweewun

The Nation