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Six-Month Plan Extension Approved

Posted on: Saturday, 29 October 2005, 00:00 CDT

By Busrin Treerapongpichit, Bangkok Post, Thailand

Oct. 29--Creditors yesterday approved a six-month extension for the US$2.7-billion debt rehabilitation period for Thai Petrochemical Industry Plc until the end of June 2006.

According to Chanin Sutikirtsana, the official receiver, creditors representing 95.6 percent of TPI's outstanding debt of 100.24 billion baht participated in the vote. Creditors representing 67.6 billion baht voted in favour of the extension, those representing 7.3 billion baht voted against it and the rest, representing 23 billion baht in debt, abstained.

The vote follows a petition filed by Bangkok Bank, one of the leading creditors, to the Central Bankruptcy Court this week asking for the plan to be extended.

The extension will take effect on approval from the bankruptcy court, which is scheduled to consider the matter on Wednesday.

Some foreign creditors opposing the extension believe they can make more money by converting debt into equity at a cheap price and selling the shares later for large gains as TPI's prospects improve.

Creditors voting against the extension included Citigroup, JP Morgan Europe, Bank of America and Mizuho Bank.

According to the debt restructuring plan, TPI needs to either raise funds to repay debt by selling newly issued shares to strategic partners or convert the debt into equity, with creditors then ending up controlling 90 percent of the company.

A representative from Bangkok Bank said yesterday that selling TPI shares to strategic partners, as proposed by the administrators appointed by the Finance Ministry, was likely to be the best solution.

"I don't see what good it is for creditors to hold stakes in TPI through the debt-to-equity conversion scheme. By doing so, the chaos in the company will never end," he said.

TPI founder Prachai Leophairatana said the extension of the plan meant that the administrators must now fund strategic investors by May 1, 2006, eight weeks before the extension period expires.

Under the earlier schedule, PTT Plc and other government-linked entities were supposed to arrange to buy a combined 61.5 percent stake in TPI by Nov 4.

Mr Prachai indicated that he would find the funds to pay off TPI's remaining debt of $2.65 billion.

"I'm negotiating with some investors, the deal is almost done," he said.

Siri Jirapongphan, one of the plan administrators, said the TPI share payment deal involving PTT and its strategic allies -- the Government Savings Bank, Government Pension Fund and the state-run Vayupak Fund -- would automatically be postponed following the extension.

The main concern of the planners is the inability to change the number of directors on TPI's board, which would prevent PTT from gaining management control of the company.

The court ruled against changing the number of directors, saying it would be a breach of the bankruptcy law.

It will hold a hearing on Tuesday on an appeal from the administrators against the ruling, along with Mr Prachai's request that the number of board members remain unchanged.

TPI shares closed on the Stock Exchange of Thailand at 13.50 baht, down 20 satang, in trade worth 503.33 million baht.

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Copyright (c) 2005, Bangkok Post, Thailand

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Source: Bangkok Post

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