Siam Commercial Bank has filed a lawsuit in the Civil Court against Safari World Plc for breaching a Bt2.36-billion loan agreement after nine years of debt restructuring.

According to Safari World's statement submitted to the Stock Exchange of Thailand (SET) yesterday, the company has appointed a lawyer to defend the case. Safari World stocks closed at Bt2.94, down 1.3 per cent yesterday.

Pin Kewkacha, founder as well as president and executive chairman of Safari World, was not available for comment.

SCB president and CEO Khunying Jada Wattanasiritham said yesterday that banks had done restructuring with the company several times.

She said Phuket FantaSea, the company's subsidiary, had recorded losses and as a result the company did not have the cash flow to repay debts.

However, she said SCB already had collateral for the Safari loan that covered the debt, currently treated as a doubtful loan.

The company reported to the SET last year that it had agreed with "a local bank" to do a third debt restructuring, which took effect on July 1, 2004.

The company, however, did not disclose the bank's name.

According to the report, the loan principal as of June 30, 2004 was Bt1.4 billion, while the overdue interest was Bt577 million. The company also had Bt10 million in an overdraft loan.

After the restructuring, the company agreed to repay the principal by June 2015 in 40 quarterly instalments starting from September 5, 2005.

The company also agreed to pay interest of 3 per cent per annum from July 1, 2004 to June 30, 2005. In addition, the company agreed

to pay interest at the MLR per annum from July 1, 2005 to June 30, 2015.

Safari World has recorded losses so far this year as it did last year mainly due to its interest payments. The company informed the SET earlier that its higher interest expenses were a result of a local bank charging at the default rate of 15 per cent rather than the normal minimum lending rate as Safari had defaulted on the bank's loan.

In the first quarter this year, Safari World had an operating loss of Bt107.99 million, made up of its own loss of Bt64.86 million and the Bt43.13-million loss of its subsidiary, Phuket FantaSea Plc.

"The costs and expenses in the first quarter of Bt179.79 million, an increase of 57 per cent from the same period of 2005, was caused by the increase of the interest rate from the normal MLR to the default rate as the company had not paid the principal and interest to a local bank following the debt restructuring contract," the company stated in its report for the first quarter.

In the second quarter of 2006, Safari World recorded an operating loss of Bt100.41 million, made up of its own loss of Bt83.12 million and Bt17.29 million of Phuket FantaSea.

The company's loss in the second quarter of 2006 was 112 per cent more than the Bt39.23 million in the second quarter of last year.

Most of the increase in costs and expenses came from the rise in interest expenses of Bt40.81 million, the cost of sales and services of Bt10.86 million and sales and administrative expenses of Bt13.45 million.

Somruedi Banchongduang

The Nation