SP Suzuki has requested delisting of its shares from the Stock Exchange of Thailand (SET) because of intense competition in the motorcycle industry and because its parent company Suzuki Motor Corporation (SMC) wants to operate motorcycle retail sales in Thailand itself.
SP Suzuki told SET that SMC, a Japanese corporation that owns 52.06 per cent of total issued and paidup capital of Thai Suzuki Motor, has offered to buy all the ordinary shares of TSM held by SP Suzuki. As a result, it has decided to discontinue its business in the motorcycle industry.
SP Suzuki envisages that competition in the industry will become more intense and that if it were to continue its business, it is likely to experience operation losses, further damaging its financial position. This would obviously hurt not only SP Suzuki but its shareholders.
Satitphong Phornprapha, managing director of SP Suzuki, said in a company statement that SMC planned to operate motorcycle retail sales in Thailand itself and hence had proposed that SP Suzuki terminate its distributorship agreement with TSM and, consequently, the agreements SP Suzuki has with Suzuki dealers. SP Suzuki has therefore requested that TSM repurchase inventory from the company.
SP Suzuki will sell all 5,088 of its TSM shares, accounting for 18.78 per cent of total paidup capital, to SMC. The par value is Bt10,000 each, while the selling price per share will be Bt13,166.67. In addition is the dividend income of SP Suzuki of Bt26,504 per share, for a total dividend of Bt134.85 million paid by TSM.
The proceeds from the disposal of TSM ordinary shares will be Bt669.92 million. Therefore, the total amount from both dividend income and proceeds from disposal of ordinary shares is Bt804.77 million.
The counterparties in this transaction are SMC, TSM and SP International. SP Suzuki will make a tender offer of shares or other types of securities that can be converted into shares to SP International, a major shareholder, with an offered price of Bt16.20 per share. In addition, the company has decided to dispose of its investment in Zinphol, a wholly owned subsidiary, totalling 1.29 million shares at par value of Bt100 per share. The minimum disposition value of Zinphol is Bt24 million.
The sale of ordinary shares of Thai Suzuki Motor, the termination of distributorship and dealership agreements, the sale of inventory, and the disposal of ordinary shares of Zinphol are considered disposal of most of the company's operational assets.
The company status will be equivalent to that of a cash company (that is, most of its assets consist of cash, cash equivalent, and shortterm investment). The company will discontinue its business operations and has no intention of investing in a new business. SP Suzuki expects all transactions will be completed by the end of the year.