Concerned about the dilution effect of the measures, investors began shedding the stock as soon as the bell rang. Singha Paratech's shares closed the day at Bt3.74

Chief executive Somchit Bosereewong told the Stock Exchange of Thailand that its directors had resolved to float 128 million capital-increase shares to existing shareholders at a rate of two new shares for every five

shares held, at a price of Bt2.50 each.

Soon after the new share subscription, the company will offer 112 million warrants free of charge to existing shareholders at a rate of one warrant for every four shares held.

Each warrant, carrying a seven-year maturity, will be convertible into a common share at an exercise price of Bt6 each.

In addition, the company plans to issue 16 million warrants free of charge to its directors and employees under its employee stock-option programme. Each warrant will have a five-year term and will be convertible into a common share at a price of Bt1.

The recapitalisation is subject to approval from the shareholders at an extraordinary meeting on November 21.

After the capital increase is completed, the company's registered capital will rise from Bt320 million to Bt576 million. Proceeds will be used to buy new equipment to raise Singha Paratech's production capacity to serve growing demand, Somchit said.

"If the recapitalisation process is on schedule, the firm will be able to install new equipment and begin test runs in the first quarter of next year. The company's annual production capacity will be increased from 1.4 million square metres to 2.2 million," he said.

The flooring manufacturer plans to expand exports into Australia and the Middle East. It is currently trading with European countries and the US.

Somchit said the capital increase will not have a big impact on shareholders because net profits will increase following the capacity expansion, which will offset the decline in earnings per share as a result of the share allotment.

The firm has a sales target of Bt1 billion this year, up 25 per cent from last year's Bt752.24 million. Its second-quarter net profit declined from Bt20.75 million in the corresponding period last year to Bt18.24 million.