Massive Thai loan auction disappoints
Massive Thai loan auction disappoints
BANGKOK (AFP): Thai finance officials on Saturday faced
accusations that a massive US$6.2 billion auction of business
loans was a failure after it drew bids worth less than a fifth of
total asset values.
Loans were culled from 56 finance firms that folded after
Thailand plunged into economic crisis following Asia's currency
meltdown in mid-1997.
The Financial Sector Restructuring Authority (FRA) which
administered Friday's sale said 13 bids were tabled, of which
eight had been successful.
Forty-four of the 46 bundles of a total of 7,000 loans on
offer were sold -- 98 percent of total assets up for grabs, the
FRA said.
Assets with an aggregate outstanding principal balance of 221
billion baht ($5.9 billion) were sold, but only fetched 40.3
billion baht ($1.1 billion), equivalent to only 18.2 percent of
their outstanding value.
Successful bidders included Goldman Sachs (Asia) Finance,
Global Thai Finance and Securities Limited, which is run by
Lehman Brothers and Starwood Thailand Holdings.
Thailand's Asset Management Corporation, a government agency
set up as a bidder of last resort walked away with 29 lots worth
about 31 billion baht.
Proceeds from the sale will be used to pay creditors of the
folded finance firms.
FRA Chairman Amaret Sila-On told reporters late Friday he
could not say if the sale had been a failure.
Amaret tearfully admitted last December that a first auction
of some $10 billion worth of business loans had failed after it
realized only around 19 percent of asset values.
Sections of the Thai press poured scorn on the auction results
Saturday.
Branding the sale as a "flop" the Nation daily said "Failure
came again to the Financial Sector Restructuring Agency."
But some analysts were more charitable, pointing out that many
assets up for sale are classified as non-performing so it was not
a surprise bids were unimpressive.
Others said that despite the low bids, the near completion of
the auction process marked another step on Thailand's road to
recovery.
"I don't think you should attach too much importance to it,"
said one specialist in Thai finance.
"It had to be done, they had to find some sort of mechanism to
deal with the insolvent finance companies.
Officials had hoped the loans would fetch around 25 percent of
total asset value after hopes of recovery were boosted by the
recent passage through parliament of bankruptcy and foreclosure
laws deemed vital to rescuing the battered Thai economy.
The process of recouping the debts of the closed firms is
viewed as a key test of Thailand's efforts to piece its shattered
economy back together.
December's auction, worth $10 billion, was branded a failure
by officials when only nine of the 45 lots on offer were shifted
in what was billed as the "biggest ever one-day asset sale."
Although agreements were later reached to sell more batches of
loans the results set back hopes Thailand was about to emerge
from its economic turmoil.
The sell-off has also been heavily criticized in Thailand by
opponents of the government who see it as a "firesale" that will
result in a bonanza for foreigners.
Officials said last month they were ready to start carving up
the proceeds of huge sales of finance firms' assets.
Assets and loans culled from the firms have been sold off in a
series of auctions, but officials have refused to say how much
money has been raised.
Sold holdings include auto hire purchase contracts and
residential mortgage loans.
Symbols of Thailand's economic boom years of the late 1980s
and 1990s, some 160 golf course memberships and 2,000 mobile
telephones and pagers from the firms went on sale last August.
Other assets disposed of included furniture and art that once
graced the companies' boardrooms and lobbies.