Thai court decision on Citic-Prachai bid for TPI on Monday

28 June 2005 08:29  [Source: ICIS news]

SINGAPORE (CNI)--Thai Petrochemical Industry (TPI) founder Prachai Leophirathana will find out on Monday whether his bid to regain control of the company will succeed, in a court decision that analysts say is probably his last throw of the dice.

Thailand's Central Bankruptcy Court said on Monday that it will announce next Monday whether it will grant a petition by Prachai and Hong Kong-listed China-based Citic Resources Holdings (Citic) for access to TPI's books in order to conduct due diligence. 

TPI collapsed under a mountain of US-dollar denominated debt after the 1997 financial crisis, when the Thai Baht was floated. The Ministry of Finance (MoF) is its administrator, but Prachai and the Thai government have been involved in a battle over the company's rehabilitation.

Prachai and Citic made the bid after the MoF has agreed to sell national oil and gas major PTT Pcl a 31.5% stake in TPI and give it management control. The Thai Government Pension Fund, the Government Saving Bank and national fund-manager Vayupak Fund would take a 10% stake each, while the holding of Prachai and his family will be cut to less than 10%.

If the petition succeeds, the MoF would most likely have to postpone the sale of TPI to PTT and the other government-linked companies at least until the Prachai-Citic team completes due diligence.

However, analysts told CNI that the petition was unlikely to go through, as Prachai has not shown that he had the $900m that was needed to prove his plan's viability. He has said that Citic will arrange a loan of around $900m for the deal and that he would find another $1.8bn in funding, but Citic itself has not mentioned a specific financial plan.

TPI's MoF-appointed plan administrator Siri Jirapongphan told CNI that the deal with PTT and other government-linked agencies was binding.

"We've signed an agreement, and that is binding according to TPI's rehabilitation plan. We must follow it, and we believe that is the best deal," said Siri. "Mr Prachai has asked the court to allow Citic, an unrelated company, access to documents and time to conduct due diligence. I cannot predict the court's decision, but I believe that is just a minor issue."

TPI is scheduled to exit rehabilitation around August, upon which PTT and the government-linked companies would pay for the shares they agreed to buy. Observers believe that if Prachai fails in this bid, he was unlikely to have enough time to mount another challenge.

By: Siva Govindasamy
+65 6780 4359

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