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Published on September 19, 2007

The Stock Exchange of Thailand has demanded more information from International Engineering (IEC) concerning its disposal of a 50-per-cent stake in Cambodian-registered Crystal Agro for US$500,000 (Bt17.13 million) to Major Ayupun Karnasuta.

The information must be provided to the SET by tomorrow.

"Upon examination of the said disposition of Crystal Agro shares, the SET found that essential information provided by IEC was not clear enough," the stock exchange said in a statement released yesterday.

The remaining 50-per-cent shareholding in Crystal Agro is owned by Suwit Witchawut, who has had a close relationship with one of IEC's former directors. The company is a plant-cultivation firm for ethanol products and part of IEC's investment in alternative-energy projects.

IEC earlier reported that in June 2006, it entered into an agreement with Crystal Agro to purchase Bt60 million worth of wood.

Later in the same month, IEC entered into a sales agreement with Siam Stone Architect (SSA) covering the sale of wood bought from Crystal Agro at a contract value of Bt220 million.

IEC made full payment for the wood on the condition it all be delivered by Crystal Agro. Under its sales agreement, SSA is obliged to cut and transport the wood from the site at its own expense before next August 1.

IEC received a Bt50-million advance from SSA, and the remaining Bt170 million was due for payment this past January 15.

However, IEC said it would consider revising the terms of payment of the remaining amount, because Crystal Agro was awaiting the outcome of an environmental-impact analysis that was required by Cambodian authorities before permission was given to cut and transport wood from the concession area.

The result of the analysis and permission from the Cambodian authorities were expected in August and November of this year, respectively.

The SET has since found that IEC's second-quarter financial statements showed a combined amount of other receivables and short-term loans given to Crystal Agro totalling Bt3.78 million, at an interest rate of 7.5 per cent per annum. The principal and interest repayments were "on demand".

The SET wants further details about the objectives of and reasons for the share disposal, its impact, obligations under agreements involving IEC, Crystal Agro and SSA and details of loan repayments and guarantees to Crystal Agro.

It also seeks information on whether the share sale will affect obligations of wood delivery, including the scheduled Bt170-million payment, and how this will be achieved.

The SET asked, "[Is there a] contingency plan in the event SSA is not able to cut and transport the wood within two years, or by August 1, 2008, as specified in the agreement?

In the event SSA fails to perform as mentioned, is IEC required to refund the advance of Bt50 million to SSA? Why?

Will IEC be able to retrieve the Bt60-million advance payment for the purchase of wood from CTA? Why?"

Siriporn  Chanjindamanee

 The Nation