100% takeover a tough deal

Published on September 20, 2005 - Khanchai Boonpan, the founder of Matichon Plc, would have no problem raising about Bt270 million to buy back the 12-per-cent stake in his publishing house from entertainment tycoon Paiboon Damrongchaitham.

Yet how he would raise another Bt1 billion to launch a 100-per-cent tender offer for Matichon remains very sketchy.

Ayudhya Investment and Trust Plc, an affiliated company with Bank of Ayudhya, is providing financial advice to Khanchai on how to raise the money to buy back the Matichon shares and eventually conduct a 100-per-cent tender offer. At this point, Khanchai has not held any talks with creditors on the possibility of asking for loans for the share buyback. Ayudhya Investment and Trust is trying to come up with a loan package with a repayment period of about 14 years.

Khanchai has succeeded in warding off the takeover threat from Paiboon, who has agreed to back off from the deal following unprecedented social and media pressure. Paiboon’s GMM Media has built up its stake in Matichon to 32.23 per cent and in Post Publishing to 23.26 per cent in an apparent attempt to take over both firms.

Now Paiboon is in the process of asking the Securities and Exchange Commission to nullify an earlier request by GMM Media to pursue a 100-per-cent public tender for Matichon. GMM Media would retreat by selling a 12-per-cent stake in Matichon to Khanchai at Bt11.10 a share, hence reducing its stake from 32.23 per cent to around 20 per cent.

Sources said the atmosphere in Matichon has been rather tense as Khanchai looks for ways to raise money for the share buyback. Although Khanchai might win the first round of the takeover, he would have to pay a heavy price for this victory to keep control over Matichon.

“The financial advisor is looking at the deal in great detail. We don’t know when it is going to finish. But if we have assets to pledge to the financial institution, then we’ll get the 12-per-cent stake. Perhaps the securities representing this 12 per cent stake can be further pledged to raise new money as part of the tender offer,” said a well-informed source, who asked for anonymity.

In total, it would cost around Bt1.3 billion for Khanchai to conduct a tender offer for all of Matichon’s shares. This amount is beyond Khanchai’s personal muscle as he and his family hold about 24 per cent in the firm. A 12-per-cent buyback would raise his and his family’s holdings to 36 per cent, well exceeding the 25 per cent trigger point that requires Khanchai to conduct a tender offer.

It is inevitable that Khanchai would have to look for allies to help him buy the shares. He is not in a position to go for it on his own. Said one source: “Khun Khanchai is kind of a nakleng [proud man]. He would not want to trouble anybody when he is in trouble. But he is looking at different options.”

But, Khanchai has friends in abundance. There are reports about one person who has bought 500,000 shares of Matichon and asked that Khanchai keep them to fight Paiboon.

Another person offered to give him 200,000 shares.

The Khanchai camp is also hoping that the newspaper company founder might not have to pursue a 100 per cent tender offer. “We are looking into the possibility of whether the tender offer rules may be waived in the event that the purchase of existing shares does not result in any change in management.

“Besides, whether a party is required to do a tender offer or not depends on the final deliberation of the Securities and Exchange Commission,” the source said.

Chalee Chanthanayingyong, the assistant secretary-general of the Securities and Exchange Commission, made it clear yesterday that Khanchai would be required to conduct a tender offer in accordance with securities laws.

Thanong Khanthong
The Nation