Malaysian companies to buy stakes in ailing Thai firms
Malaysian companies to buy stakes in ailing Thai firms
BANGKOK (AFP): Two of the 16 ailing Thai finance companies closed by the central bank two weeks ago and ordered to come up with recapitalization plans by yesterday have announced that Malaysian firms will be issued new shares.
New Straits Times has signed a memorandum of understanding (MoU) with CMIC Finance and Securities Plc for the purchase of more than 51 percent of the companies shares, a CMIC executive said.
Meanwhile, Thai Financial Trust plc, also known by its Thai name of Thana Thai Finance, said Repco Holdings Ltd. of Malaysia and Asia Securities of Taiwan will each take a 25 percent stake in the company.
Bank of Thailand deputy governor Jaroong Nookhwun said Friday the central bank was ready to force those among the 16 firms that could not find new partners to merge their viable assets with a state-owned finance company, Krungthai Thanakit plc.
Those which find white knights from abroad or group themselves with other merger partners must sign an MoU to stave off central bank interference, he said.
Jaroong added the central bank would not announce merger plans this month due to the uncertainty in currency and capital markets, which could give more finance companies a chance to arrange mergers on their own.
The Thai foreign minister and finance minister will also be busy with a trip to Japan next week.
They are expected to ask Japan to lead efforts to build a foreign currency credit line of up to US$20 billion for a Thai government emergency fund to boost liquidity and reserves.
Thai officials confirmed the visit, but said a dollar amount had not been placed on the country's needs.
A Japanese news agency Friday said the country would contribute one billion dollars to the emergency fund.
Analysts in Bangkok questioned whether Thailand could raise enough to cover liabilities from other central banks without going to the International Monetary Fund.
Foreign banking sources in Bangkok said many of their number had frozen credit lines to Thai financial institutions in view of the baht's fall and uncertainty about central bank backing for the creditors of failed or merged institutions.
Several foreign creditors were refusing to roll over short- term loans to Thai banks and finance companies, so the government was expected to have to inject billions of dollars into the system in coming months to maintain liquidity.
CMIC managing director Pongsthorn Kunanusorn said the local company and its Malaysian partner had already presented the MoU and a plan for a capital increase of five-to-six billion baht ($165-to-$200 million) to central bank officials.