The Cabinet decided to push THAI into a bankruptcy procedure under the Bankruptcy Act BE2483 (AD1940) and ordered the Ministry of Finance to sell its majority stake in the airline.

THAI will stop repaying all debt and start from scratch, the government said. According to the size of its debt, 30 per cent of its over 20,000 employees, or over 6,000 people, will have to be dismissed. They will receive a 10-month compensation as per the labour law.

The rehabilitation of the airline has to be approved by the creditors and it is likely to take at least one year, sources said.

An informed source in the financial sector said on Wednesday (May 20) that THAI’s domestic and foreign creditors have signalled that they want the airline to seek bankruptcy protection. The creditors also have appointed lawyers to negotiate the repayment of debt, while the Transport Ministry has been assigned by the Cabinet to file for the airline’s rehabilitation with the Bankruptcy Court.

According to THAI’s 2019 financial statement, its debt obligations stand at Bt147.4 billion.

The debt comprises Bt46.5 billion incurred from the leasing of planes with 32 planes used as collaterals for loans from foreign banks, including banks in France and Japan. Another chunk of the debt is Bt74.1 billion in loans, of which Bt2 billion is owed to Krung Thai Bank, Government Savings Bank, and CIMB Thai, Bt8.9 billion taken in long-term loans from banks in Germany and the United states, and a short-term debt worth Bt3.5 billion. The airline also owes a Bt11.9-billion foreign currency denominated debt to the Finance Ministry and Bt437 million owed to the Export-Import Bank of Thailand.

“If the rehab process moves fast and some businesses can be split apart, then THAI could recover within a year,” the source said, though he conceded that if the Finance Ministry cuts its holding to below 50 per cent, then THAI will find it tough to raise funds in the future.

Finance Ministry officials are scheduled to meet with representatives of Vayupak Fund today (May 21) to discuss the option of selling off shares after the Cabinet approved the ministry’s proposal to reduce its holding to 48 per cent. The ministry plans to sell 3.17 per cent of its shareholding to the fund.

Initially the two sides agreed to price the shares at a seven-day average and a 15 to 20 per cent discount. The ministry is expected to get approximately Bt600 million to Bt700 million from the transaction.

Finance Minister Uttama Savanayana has said that the sale of shares should be completed within next week.

THAI’s share price has risen sharply over the past two months, closing at Bt5.4 on Wednesday – up almost 15 per cent from the previous day and touching the upper ceiling for the eight time in two months.

Meanwhile, Tisco Security has warned that investing in the airline may be too high a risk, citing the fact that few companies have had success in rehab. Since the 1997 financial crisis, 52 firms filed for bankruptcy protection, and 20 or 38 per cent have failed and been removed from the stock market. Nine firms are still under rehabilitation and trading in their shares has been suspended, while 23 firms, representing 44 per cent, have been successfully rehabilitated and have returned to normal trading.

Rehabilitation on average takes seven years, a Tisco analyst said.

The Transport Ministry is expected to file for bankruptcy protection on THAI’s behalf in mid-June with Thai and US courts. Transport officials and THAI’s management team will submit a list comprising 30 names for the rehab management team to Prime Minister Prayut Chan-o-cha on May 25 for consideration.

The transaction was completed at the agreed valuation of a 1.63 times Permata’s book value as of March 31, or approximately 33.662 trillion rupiah (US$2.282 billion, Bt73.722 billion).

Permata, with an asset base of 167.394 trillion rupiah, 3.75 million customers and 312 branches across Indonesia, is now Bangkok Bank’s most significant investment.

Bangkok Bank will now apply to the Indonesian financial regulator, Otoritas Jasa Keuangan (OJK), for approval to conduct a mandatory tender offer for the remaining 10.88-per-cent stake in Permata. Bangkok Bank’s Indonesian branches will be combined with Permata in the future.

The acquisition of Permata is a strategic move for growth, said Chartsiri Sophonpanich, president of Bangkok Bank.

“Permata will give Bangkok Bank a stronger presence in Southeast Asia’s two largest economies, reinforcing our position as a leading Asean bank. We will support Permata to grow its retail, SME and corporate business, while Bangkok Bank’s customers will have enhanced access to growth opportunities in Indonesia. We are also looking forward to continuing to expand the business partnership between Permata and Astra.”

Bangkok Bank has a long history in Indonesia having opened its first branch in Jakarta in 1968. “Bangkok Bank has been present in Indonesia for more than 50 years and we remain highly confident in the country’s resilient economy and bright future prospects,” said Chartsiri.

“During these difficult times, as countries grapple with the Covid-19 pandemic and its economic repercussions, we will stand steadfast alongside Permata. Together we will support our people, customers and communities to help them overcome these challenges.”

Visit Malaisirirat, CEO of MQDC, expects the number of new real estate projects to drop as other developers review their business plans amid the drop in demand caused by the pandemic, adding that the virus crisis may also change consumers’ behaviour.

“However, the company will continue with our development, especially of The Forestias project, the country’s biggest mixed-use [property] project worth Bt125 billion,” he said.

The Forestias, on Bangna-Trat Road in the southeast of the city, would be completed within three years, he added.

Consumers increasingly prefer homes located outside the city in spacious areas rather than homes near mass transit systems, as they are able to work from home, said Visit, citing a study by MQDC’s FutureTales Lab.

“This is an opportunity for the company because we plan and design projects by focusing on future living trends and consumers well-being.”

He added that DTGO Corporation, the parent company of MQDC, allocates 2 per cent of revenue minus expenses to the Buddharaksa Foundation and the Dhanin Tawee Chearavanont Foundation, to support education for children and improve quality of life in Thai society.

“We have also allocated budget to help people suffering during the Covid-19 outbreak,” he said.

Deputy Transport Minister Thaworn Senneam said that THAI’s debts were checked on May 15, when documents showed that Airbus is trying to collect debts for rental of 30 airplanes as the due date draws close.

He added that Prime Minister Prayut Chan-o-cha ordered THAI’s rehabilitation via the bankruptcy law rather than the State Enterprise Policy Office’s plan for a Bt54.7-billion loan guaranteed by the government because the private sector holds 31 per cent of THAI shares.

Had the government supported THAI’s rehabilitation, it would have violated the new State Fiscal and Financial Disciplines Act.

The government had supported THAI for five years but failed to solve the carrier’s financial issues, so the bankruptcy procedure was now the best option, Thaworn said.

After the Finance Ministry sells its majority stake in the shareholding, THAI will no longer be a state enterprise and would be easier to handle, he said.

The recovery plan must also be filed with the US bankruptcy court to prevent American creditors from taking back all the planes or collecting THAI’s assets.

The 53 Airbus aircraft loaned to THAI comprise six Airbus A380-800, 12 A350-900s, 15 A330-300s and 20 A320-200s.

The company is confident of securing new contracts with a combined capacity of 50 megawatts in 2020. It recently signed solar rooftop installation contracts for two Honda factories in Rojana Industrial Park, Ayutthaya, and in Prachinburi, for a total capacity of 5MW, due for completion in the third quarter this year.

The company’s chief executive officer, Niphon Bundechanan, said that the company would continue to expand its solar rooftop installation business and expects to secure new contracts for 50MW in 2020 and 100MW in 2022.

Recently, the company signed a contract with Honda Automobile (Thailand) Co to install solar rooftop cells at two factories in Ayutthaya and Prachinburi provinces for a combined capacity of 5MW. Of the total, the 2.5MW solar rooftop cells will be installed at the Honda factory in Rojana Industrial Park, Ayutthaya, to generate electricity to be used in the production and wastewater treatment plant.

Another 2.5MW solar rooftop cells will be installed at the Honda factory in Rojana Industrial Park, Prachinburi to generate electricity for the production lines. The solar rooftop installations, which began in April 2020, will offset Honda’s carbon dioxide emissions by 100,000 tonnes throughout the system’s lifespan.

The company has already signed solar rooftop installation contracts with 43 customers, of which 29 are in WHA Group’s industrial estates and logistics parks, and 14 are non-industrial estate customers.

Moreover, 80 potential customers are showing interest in solar rooftops and are in talks for installation, expected to be completed within this year, the CEO said.

“The company has plans to further expand its business with the development of renewable energy solutions, especially solar rooftops. It recently signed a memorandum of understanding with the Electricity Generating Authority of Thailand to jointly conduct a feasibility study to develop new energy innovations such as smart microgrid, peer-to-peer energy trading, net metering and energy storage system in WHA Group’s industrial estates. These innovations are expected to provide convenience for solar rooftop customers in industrial estates. For 2020, the company has set an ambitious target of 591MW in terms of shareholding equity,” Niphon said.