June 7, 2000

HEADLINE: Tanayong Struggles to Save Skytrain From Insolvency

TANAYONG, majority shareholder of the Bangkok Transit System (BTS), will ask its creditors to convert its debt to equity to save the Skytrain project from insolvency.
A BTS source said Tanayong is due to make a US dollar denominated interest payment on June 31, but the company is unlikely to be able to comply.
The debt service is worth between 700 and 900 million baht.
Tanayong said it plans to use its credit lines with local finance firms to help it pay.
However if lenders refuse to extend credit lines, Tanayong said it will have no choice but to ask creditors to swap debt for equity to keep the project alive.
In January, Vichet Buadhjuvong, BTS President, said the company's total debt was equivalent to US$1.2 billion, out of which $650 million was in US dollars.
The same source also said that for its baht-denominated debt, the company was scheduled to pay 120 to 150 million baht monthly or four to five million baht daily.
"Unfortunately, the Skytrain generates only three to four million baht per day, compared to the original target of 12 billion baht, which is not enough to pay the interest let alone the principal sum," said the source.
Tanayong is said to have been in talks with creditors about converting debt to equity, but the creditors are "not too happy" about the proposal, the source said.
In the event that the lenders turn down both the credit line and the debt conversion plan, the source said, the last resort for Tanayong will be to issue new shares to public. The company had recently proposed a new share issuance scheme to the Securities and Exchange Commission (SEC).
Generally, the SEC doesn't look at a company's operating results as a criteria to approve new share offering, but instead it considers company's ability to generate dividends, and places emphasis on its financial disclosure willingness. If approved, the company must proceed within six months.
"Issuing new shares right now is a next to impossible task because of BTS's inability to meet its revenue targets, and there's no sign that creditors would agree to swap debt.
The Skytrian, which started operations last December, is less popular among Bangkokians than expected, who cite the inconvenience of commuting to and from stations as the discouraging factor.
Yesterday Tanayong shares closed at 3.30 baht, down 0.20 baht.