Stainless-steel tube- and pipe-maker Thai-German Products (TG Pro) is negotiating with both local and foreign strategic partners to buy back a 35-per-cent stake from creditors after the company resumes trading on the Stock Exchange of Thailand (SET) next month.

Managing director Rachata Leelaprachakul said that after the Central Bankruptcy Court approved the withdrawal of the company from its rehabilitation plan last November 30, it had shown healthy growth. As a result, it had applied to resume trading on the SET in this year's first quarter. The SET has approved resumption of trading in company shares from next Thursday.

The company's rehabilitation plan gave the major shareholder the right to buy back 35 per cent of TG Pro from its creditors - who had converted their debt to equity under the company's debt restructuring plan from 2000 - on completion of the rehabilitation.

 The buy-back could be effected this year either at a price of Bt1.71 per share, or at the market price prevailing five days before the deal, depending on whichever is better.

Rachata said his family, which now holds up to 10 per cent, and his family's partner, were interested in buying back the shares from the creditors this year after negotiating with new strategic partners.

"We are negotiating with both foreign investors and domestic partners to jointly buy back the stake from our creditors. We cannot disclose the name of our strategic partner now but our deal will be completed within the fourth quarter of this year. We may invest nearly Bt100 million, depending on the price when the deal is final," he said.

Siam City Bank is a major creditor, holding 25.03 per cent in TG Pro, followed by Krung Thai Bank with 16.08 per cent, while 14.84 per cent is held by International Finance of Thailand, which has now merged with TMB Bank.

TG Pro is a market leader in the production of stainless-steel tubes for industries, with 40 per cent of Thailand's stainless-steel tube market of 20,000 tonnes a year.

The company's products include tubes for heavy industry, petrochemical plants, paper pulp and chemicals, auto, food and dairy products, pharmaceuticals, furniture and other industries, both domestic and international, requiring special tailor-made stainless-steel pipes.

The company faced a debt burden after the 1997 financial crisis and had to enter the debt-rehabilitation process in 2000.

The company recorded total sales of Bt1.75 billion and net profits of Bt36 million at the end of last year, with 68 per cent of its total sales from the domestic market and 32 per cent from exports. The company's debt-to-equity ratio was only 0.94:1 after the debt-restructuring process.

The company's Rayong plant now runs at only 30 per cent of its total production capacity of 50,000 tonnes a year.

Rachata said the company would boost production capacity in the second half of this year when its planned expansion of the overseas market succeeds, with exports to Australia and Asean countries.

Rachata said the company needed cash flow of up to Bt300 million to increase production from 30 per cent of total capacity to 60 per cent if the export demand goes up.

"These funds may be borrowed from a bank," he said.

The company now exports to 20 countries in Europe and Latin America, plus the US.

Somluck Srimalee

The Nation