Financial Times (London)

 

September 21, 2000, Thursday London Edition 1

 

SECTION: COMPANIES & FINANCE: ASIA-PACIFIC; Pg. 36

 

LENGTH: 443 words

 

HEADLINE: COMPANIES & FINANCE: ASIA-PACIFIC: TPI creditors offered debt-equity swap

 

BYLINE: By AMY LOUISE KAZMIN

 

DATELINE: BANGKOK

 

BODY:

Creditors of Thai Petrochemical Industry, Thailand's largest debt defaulter, will convert around Dollars 800m of accrued interest into a 75 per cent stake in the firm under a debt restructuring plan to be submitted this week to the official receiver.

The proposal for an enlarged debt-equity swap was put to key creditors last month when the Australian company planning TPI's restructuring became concerned it would not find an investor willing to inject Dollars 500m of new capital into the company.

Anthony Norman, managing director of Effective Planners, appointed to develop a rehabilitation plan after TPI was declared bankrupt in March, said he expected the plan to win the support of the majority of creditors when it is put to a vote, probably in November. 

"The economic logic of it is so compelling, it wasn't a difficult sell," Mr Norman said yesterday. "It provides the same returns with a much lower risk."

TPI's creditors had earlier agreed to swap about Dollars 250m of accrued interest for equity, while a strategic investor was expected to inject another Dollars 500m in new capital. But it was felt the search for a new investor would involve too much "uncomfortable uncertainty", Mr Norman said. With creditors as the new investors, "the company doesn't have to concern itself so much about whether an investor is out there".

TPI's total debts, including accrued interest, are around Dollars 3.7bn, which will be reduced to Dollars 2.9bn after the debt-to-equity swap. The swap implies a price of about Bt5.45 per share, above the Bt4 per share price on the Thai stock exchange at the close of trade on Tuesday.

Trade in TPI shares was suspended yesterday because of the announcement of the plan.

Along with the debt-equity swap, it calls for the company to raise at least Dollars 200m through the sale of non-core assets.

It is envisaged that by December 2004 TPI's debt would be Dollars 1.8bn. The expanded equity will be a significant addition to TPI's market capitalisation, currently estimated at about Dollars 180m.

The deal also offers an olive branch to Prachai Leophairatana, TPI's founder and chief executive. Creditors were furious last year when they discovered that Mr Prachai had, without their knowledge, spent about Dollars 70m towards completing an additional refinery, storage tank facilities, and a port expansion during talks over debt restructuring.

The plan calls for creditors to hold their new shares in a block during the four-year rehabilitation period, during which time Mr Prachai and his family, currently the majority shareholders, would have the opportunity to buy the shares back. 

 

LANGUAGE: ENGLISH

 

LOAD-DATE: September 20, 2000