BANGKOK POST

 

September 21, 2000

 

LENGTH: 635 words

 

HEADLINE: DEBT RESTRUCTURING: TPI rehabilitation plan is completed; Sent to Bankruptcy Court next Monday

 

BODY:

 

The long-awaited business rehabilitation plan for Thai Petrochemical Industry Plc has been completed, according to Anthony Norman, managing director of Effective Planners Co.

The plan would be submitted to receivership officials in the business rehabilitation office of the Central Bankruptcy Court on Monday, he said. 

TPI creditors are expected to vote on the plan in November, and Mr Norman expressed confidence that they would approve it, as the plan would strengthen the financial health of TPI in the future.

The main component of the plan would involve converting outstanding interest of US$756 million into a 75% stake of TPI's registered capital, with conversion at 5.45 baht a share. 

However, the converted shares could not be sold until TPI's rehabilitation plan was fully implemented, which would be in 2004.

TPI chairman Prachai Leopairatana would have the right of first refusal in buying back the converted shares at 5.45 baht each, plus 1.5 times the prevailing interest rate.

In repurchasing the shares, Mr Prachai could buy all the shares alone or with other former shareholders of TPI.

Mr Norman said the remaining debts would be divided into two groups. On the first group totalling $2 billion, scheduled interest payments would be made, with the principal repaid on Dec 31, 2004. The same schedule would apply to a second group of debts totalling $1 billion.

The rehabilitation plan requires the disposal of TPI's non-core assets totalling $200 million to repay its loans in 2001. There is no mention of which non-core assets would be sold.

Nor does the plan mention a previously contentious proposal to increase TPI's capital by about $700 million. However, it does allow for additional sources of funding. TPI would be allowed to borrow up to a maximum of $250 million, but not to raise new capital until after 2004.

All its existing loans in terms of baht, US dollars, euros and yen would be converted into one common currency.

Seven TPI affiliates that have filed for business rehabilitation would adopt plans similar to TPI's.

Mr Prachai said yesterday that he accepted the final plan as the best one possible under the circumstances. He said one important improvement was a condition that the creditors who would be TPI's major shareholders could not sell their shares until 2004. Earlier agreements contained no such restriction.

He said the conditions preventing share sales and allowing for buy-backs later would benefit all concerned and would help the price of TPI shares improve steadily.

As creditors would not be able to sell their shares over the next four years, only 25% of the shares would be available for trading in the market.

Mr Prachai said the amount of shares to be bought back after 2004 would depend on the prevailing situation at the end of the rehabilitation period.

"Earlier, I had already made up my mind to accept whatever would happen. The conditions offered in the plan are quite acceptable. However, it is definite now that I would have to lose my control of TPI as I am no longer its major shareholder."

He said he was pleased, however, that the planner had agreed to postpone the disposal of TPI's non-core assets as they might not fetch good prices at present.

In particular, there was a plan to cut TPI's stake in cement maker TPI Polene to 30% from 48% after the latter completed its debt-equity conversion.

Mr Prachai said he had no objection to the disposal but the selling price of TPI Polene shares had to be properly considered.

However, he said he strongly opposed the idea of selling TPI's power plant as it played a very crucial role in the conglomerate's core business and was central to its business rehabilitation and long-term viability.

Kochakorn Boonlai and Busrin Treerapongpichit

 

LANGUAGE: English

 

LOAD-DATE: September 21, 2000