G Steel is proposing to issue 8.84 billion shares to swap for debt and sell to new partners.
"The company is now in talks with all the creditors to ask for coordination in restructuring its debts," Ahap Garas, CEO of the country's leading producer of hot-rolled coils, said yesterday.
The company was also in touch with interested investors.
"Mitsui is one that the company has negotiated with," he said.
The final result would depend on appropriate investors, he said.
G Steel has unsecured debts worth US$470 million (Bt15.5 billion), consisting of $170 million in debentures and $300 million in accounts payable, and secured debts worth $63 million, which are backed by its shares.
The unsecured creditors will be offered to convert their debts into equity at Bt1 apiece on the condition that they cannot sell the G Steel shares within 30 days.
A trust will be appointed to hold the converted shares for these shareholders. In case the market price of G Steel shares exceeds Bt1, the company reserves the right to buy the shares from them at Bt1 each.
"If the company can buy back all the shares from creditors, it would not have any share dilution effect," Garas said.
If the creditors agree with the condition, the debt-restructuring plan is expected to be completed in the third quarter, he said.
The move would strengthen the company's financial status.
The company has also been increasing the efficiency of its internal administration as well as risk management.
The company would speed up preparation of its first-quarter financial statements.
The 8.84 million new common shares, at par value of Bt1 each, would represent 40 per cent of total increased paid-up capital.
The process of issuing the new shares should begin in the second half.
The company said in its filing to the Stock Exchange of Thailand that of the 8.84 million new shares, 3.18 million would be used to settle unsubordinated and unsecured debentures worth $170 million coming due this year.
The remaining 5.66 million shares would go to clearing accounts payable worth $300 million, which are already payable.
G Steel stock closed unchanged at 38 satang.
The company's debt-to-equity conversion would help its creditors recover at least 20 cents on the dollar.
The company's hot-rolled coils are used to make cold-rolled coils, galvanised steel, steel pipes, structural steel products for construction, LPG containers, automobiles, electric appliances as well as furniture.
