‘10% return on move’

Published on September 14, 2005 - GMM Grammy Plc will achieve a rate of return of at least 10 per cent per annum from its investments in Post Publishing Plc and Matichon Plc, a company director said yesterday.

Sumeth Damrongchaitham said GMM Media Plc, a subsidiary of Thailand’s leading entertainment firm, will hold over 23.60 per cent in Post Publishing and 32.23 per cent in Matichon.

Speaking at a press conference yesterday, he said the company would break even on its investment within five years. Revenue from the two publishing firms will be booked in GMM Media’s financial statement in the fourth quarter of this year, he said.

Once the deal is complete, 40 per cent of the subsidiary’s income structure will be from publishing and the rest from entertainment.

Sumeth said the firm has borrowed a one-year loan of Bt2.2 billion from Siam Commercial Bank to finance the deal. But it might have to extend the one-year loan period or increase its registered capital to cover the loan repayment, he said.

“We will consider how to structure the debt once the take-over is done. Including the Bt2.2-billion loan, our debt to equity ratio is still less than two times. We will consider this after the tender offer process is done,” he said.

The company borrowed from the bank rather than use its own money because it wanted to clearly show the source of the funds, he said.

The loan will finance the tender offer procedure.

According to Securities and Exchange Commission regulations, any company that takes a 25-per-cent stake or more in another listed firm must provide a tender offer to allow retail investors to sell their shares at the same price.

In this case, GMM Media has to set a tender offer for retail investors of Matichon. It set its tender offer period from September 21 to October 26.

GMM Grammy aims to take over at least 75 per cent of Matichon after the tender offer. To maintain the free-floating ratio at 15 per cent as required by the Stock Exchange of Thailand, GMM Media may later provide investors with a public offering of Matichon shares.

Meanwhile, Sumeth denied reports that GMM Grammy is just a “middle man” for Prime Minister Thaksin Shinawatra to take over the two publishing firms.

Paiboon Damrongchaitham, chairman of GMM Grammy, told the same press conference that his company’s investment in the two newspaper groups was aimed at diversifying into the relatively secure publishing business.

He said the deal would allow GMM Grammy to integrate the publishing business with the entertainment business to create a multimedia giant.

He insisted that he would not become involved in the management of either publishing firm and said he would only help the newspapers if they asked for it.

Paiboon said he would soon meet Suthikiati Chirathivat, major shareholder of Post Publishing, to discuss GMM Media’s intention of buying more Post stock.

Suthikiati, who holds a 12-per-cent stake in the company, is due to return from an overseas trip on Sunday.

Paiboon insisted he does not intend to merge Post Publishing with Matichon as many observers have speculated.

“We all know that the newspaper business is a slow-growth business with relatively low margins compared with the entertainment business,” he said.

“We acquired both newspapers because the publishing business has high loyalty [from readers] and the human resources are valuable. Despite the low margin, the business is secure.”

Siriporn Chanjindamanee
The Nation