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Published on October 6, 2007

"It is a real investment and we are not a nominee. We purchased the major stake in Capital OK as it has expertise in debt management. We now manage delinquent loans worth Bt22 billion," ACAP director Saringkarn Sutaschuto told reporters.

ACAP and Orix Corp - an integrated financial services group based in Japan with assets of US$70 billion (Bt2.4 trillion) - announced that they would take over the entire stake of debts in Capital OK from Shin Corp for Bt990 million. ACAP will acquire a 50.99 per cent share in the Thai consumer-finance service provider and Orix will buy 49 per cent.

Capital OK is one among several targeted Shin Corp companies to be divested after Temasek Holdings became the company's major shareholder. Shin Corp recently sold out its stake in Thai AirAsia.

"Although ACAP is a small firm, we have potential in debt management," Saringkarn said. "Our profile is that we have purchased bad loans from Sukhumvit Asset Management (SAM) worth Bt34 billion, TMB Bank worth Bt4.1 billion and United Overseas Bank (Thai) worth Bt13 billion and we achieved the debt management. We think that it is not a big issue for us to manage Capital OK's Bt8.2 billion in bad loans."

He admitted that Orix alone wanted to take over the entire stake in Capital OK but it could not do so because Thai law restricts the ceiling of foreign ownership in Thai firms to 49 per cent.

"Orix is interested in the consumer-finance business in Thailand. Last year, the industry grew 17 per cent," he said.

Saringkarn said that ACAP and Orix would enter into a share purchase agreement with Shin Corp in November.

"We estimate that we will get internal rate of return (IRR) at 15 per cent from the buyout. We would take around one month to map out a business strategy for Capital OK," he said.

The takeover allows ACAP to broaden its business into consumer finance while it will come as a boon to Capital OK, as ACAP can help it in collecting debts, he said.

ACAP separately announced that it would raise its registered capital from Bt100 million to Bt200 million by issuing 100 million shares at a selling price of Bt7 each to non-bank investors through private placement.

Arak Chonlatanon, chairman of the executive committee for new business of Shin Corp, said that the ACAP and ORIX buyout deal was accepted as they would also shoulder Capital OK's debts and promise no change in the company's staff. At the moment, Capital OK has 800 staff.

He said that ACAP had earlier proposed to take over Capital OK alone but the deal was denied.

"This time, ACAP has joined hands with ORIX and we decided to sell out to them, as we consider that ORIX has expertise in consumer finance and they promise to maintain Capital OK's existing staff and purchase debts," he said.

Following the transaction, Orix and ACAP Advisory will streamline Capital OK's management structure with the aim of boosting the company's corporate value. The Japanese firm will take advantage of the expertise of its domestic consumer-loan business, according to Nikkei.

Meanwhile, iTV asked the Stock Exchange of Thailand (SET) to extend its deadline from yesterday to October 31 to submit a rehabilitation plan to avert a de-listing threat.

Earlier, iTV, another Shin Corp subsidiary, announced that it would turn in the plan within six months after the SET threatened to de-list the company's stock due to its negative shareholders' equity.

The SET's regulations allow up to two years for listed companies to submit a business rehabilitation plan. Those who fail to submit a plan within the time frame face de-listing.

Siriporn Chanjindamanee,  

Usanee Mongkolporn

The Nation