The Stock Exchange of Thailand (SET) is giving close scrutiny to a deal announced yesterday between two marketing-media companies after being officially informed that one of the companies is effectively achieving a back-door listing.

Sakkarin Ruamrangsri, the SET's senior vice president for market regulation, said information received on the deal was not clear enough and that the SET was expected to ask for more details.

Sakkarin was commenting on a report to the stock exchange from RK Media Holding. That report says Absolute Impact, a media producer and provider, will achieve a back-door listing next month when its major shareholders sell 100 per cent of its shares to RK Media Holding, which is listed on the Market for Alternative Investment.

RK chief executive Kittiwat Manosuthi later said that in practice, the transaction between the two companies was not a back-door listing. However, he felt obliged to inform the SET that it was.

Kittiwat told the SET that RK would double its registered capital and sell part of the capital-increase share issue to existing shareholders of Absolute Impact, which would provide RK with the funds to buy Absolute Impact.

RK, a holding company, is listed on Thailand's second-tier stock market and has subsidiaries that operate as providers of marketing-activity and new media. It told the SET it would buy 15 million shares of Absolute Impact, or a 100-per-cent stake, from existing shareholders on June 29.

SET regulations stipulate that Absolute Impact does not need to file for listing on the stock market, because the value of the share-purchase transaction is more than 100 per cent but less than 120 per cent of RK's net tangible assets. RK needs only to report and disclose the possession of Absolute Impact's shares and then seek approval from its shareholders.

While acknowledging that rule, Sakkarin said other factors also had to be considered when deciding whether the deal was a back-door listing.

These include changes in controlling management, qualification for listing on the stock market, supportive businesses and changes in key business strategies.

RK reported to the SET that Absolute Impact conducted a business similar to RK's. It is a media producer and provider whose core business involves two- and three-dimensional advertising screens in department stores. RK, meanwhile, operates in marketing-activity media, media technology and provision of new media.

After the transaction is complete, RK Media Holding's name will become Adamas Incorporation Plc.

Kittiwat said the takeover of Absolute Impact would have an immediate impact on RK Media's profit in the third quarter.

"Absolute Impact is a profitable company," he said. "It made a profit of Bt3 million in the first quarter. RK itself has cut its losses from all non-profitable business. We expect Absolute Impact will contribute 50 per cent of this year's profit, targeted at about Bt200 million."

RK said it had no intention of changing either its operations or the management of Absolute Impact. Two representatives of Absolute Impact's existing shareholders, Parin Chanun-tranont and Kanokwan Wannabuit, will remain on its board of directors.

RK said it would increase its capital by Bt209.66 million - from Bt194.32 million to Bt403.98 million - by issuing 209.66 million shares with a par value of Bt1 apiece.

Siriporn Chanjindamanee

The Nation