The SET-listed Thoresen Thai Agencies (TTA) failed to raise 9.9 billion baht in new capital through a rights offering, as the 70% vote in favour of the plan at yesterday's extraordinary shareholders' meeting fell short of the 75% required by law.
''Most shareholders agreed with the plan. They agree with our direction, but many disagreed with the details, especially the new-share ratio,'' said ML Chandchutha Chandratat.
Shareholders representing 45% of all voting shares attended the meeting yesterday, the highest level on record.
TTA floated a plan to raise 9.9 billion baht to partly finance a 22-billion-baht plan to double the size of its dry-bulk fleet to 28-30 vessels. The remaining 13 billion baht will be bank loans.
The plan involves the issue of 708 million new shares, the same number as its existing common shares. Existing shareholders can buy the new shares at the ratio of one existing share for one new one at 14 baht apiece.
Apart from fleet expansion, TTA, which now operates 16 vessels, will use the funds to invest in the offshore oil and gas services sector over the next 12-18 months.
The shareholders' meeting yesterday approved a dividend payment in the form of both stocks and cash but rejected the capital increase plan.
But since the dividend payment was linked to the capital increase plan, three agenda items - capital increase, allocation of shares and dividend payments - were automatically scrapped.
ML Chandchutha Chandratat, the president and chief executive, said most investors yesterday actually supported the plan in principle, but more than 20% had disapproved of the details, especially the 1:1 ratio. This point had even been brought up for possible revision at the meeting.
Management will therefore redesign the capital increase plan, possibly by raising the new-share ratio 1:2.
If the ratio is doubled, then the company would get only half the funds it wants or 4-5 billion baht.
The shareholders also suggested a warrants option to be exercised within a few years.
"If we cannot raise enough funds from the rights offering, we may look for partners that will inject funds to meet our investment target. The last resort for us is to cut the investment budget but our future returns will also be proportionately lower," he said.
ML Chandchutha said all opinions at yesterday's meeting will be discussed and proposed to the board and then to the annual shareholders' meeting set for Jan 30.
"Most shareholders agreed with the plan. They agree with our direction, but many disagreed with the details, especially the new-share ratio. They don't want to spend much money now, so the company will reconsider and look for a better solution," he said.
However, TTA is hardly in a position to borrow 22 billion baht from banks, as it must reserve its liquid assets at not less than 5% of total asset value of 45 billion baht.
Its liquid assets stood at 3 billion baht as of Sept 30, almost all of them in its Mermaid Maritime subsidiary.
"If we borrow the whole amount, our debt-to-equity ratio will be far too high and banks will not lend to us."
He said the dry-bulk freight outlook is projected to recover by 2014 or 2015.
If the company buys more vessels in time for the next upward cycle, then its return will increase rapidly.
Chalermchai Mahagitsiri has been the new major shareholder since the end of last year. His group now controls 20-23% of total shares.
Mr Chalermchai said he will exercise his rights to buy the new shares, as the price is very low at present. But if the price rises in the future, he may reconsider the option.
Shares of TTA closed on Friday at 17 baht, up one baht, in trade worth 431 million baht.
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About the author
Writer: Nuntawun PolkuamdeePosition: Business Reporter
Article source: http://www.thethailandlinks.com/2012/12/15/investors-sink-thoresen-plan/
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