[November 19, 2007] BankThai board blasted in meeting: Shares diluted and offer price halved Tweet (Bangkok Post (Thailand) (KRT) Via Thomson Dialog NewsEdge) Nov. 19--Retail investors bitterly attacked the board of BankThai Plc yesterday for allowing the bank's share value to fall sharply in recent years. Shareholders roundly blasted the bank's decision to halve the price and double the size of a new rights offering aimed at raising around 7.7 billion baht in new capital. The bank's board last month agreed to scrap a May proposal to float 2.24 billion new shares at 3.46 baht each in favour of a new offering of 4.44 billion shares at 1.73 baht. The par value of the shares is 3.75 baht each. Sathaporn Tangnirund, a long-time retail shareholder, criticised the Financial Institutions Development Fund, BankThai's largest shareholder, as only considering its own benefits. "I feel like I have been robbed by the state," he said at the bank's extraordinary shareholders' meeting yesterday. "A financial institution rests on its credibility. But to do this to minor shareholders is completely opposite." Shares of BankThai have fallen by more than 22 percent over the past three months and by more than 61 percent over the past year. In contrast, the main Stock Exchange of Thailand index has gained 10.54 percent over the past three months and 16.55 percent over the past year. BankThai shares closed unchanged yesterday at 1.84 baht. Shareholders approved the bank's plan to issue 4.44 billion new shares at a par value of 3.75 baht to existing shareholders in a rights issue priced at 1.73 baht each. Two new shares would be offered for every one share held as of Oct 26. Any unsubscribed shares would be offered to the Financial Institutions Development Fund, TPG Newbridge and other institutional investors in a private placement at 1.75 baht each. BankThai is one-third held by the FIDF and 25 percent by private equity firm TPG Newbridge. BankThai chairman Tawee Butsuntorn said the bank's accumulated losses would rise to over nine billion baht from the sale of new shares below par value. He said the bank would request approval from shareholders at its next shareholder meeting to clear the accumulated losses through a reduction in par value. Phirasilp Subhapholsiri, the BankThai president, said the rights issue was expected to be completed by Dec 10. "I would like to ask for understanding from our shareholders. TPG Newbridge's involvement will help strengthen the organisation," he said. Mr Phirasilp said the capital increase would help improve the bank's capital adequacy, now below the regulatory minimum, to 12 percent to 13 percent of risk assets. The central bank requires banks to maintain a ratio of at least 8.5 percent. BankThai reported third-quarter losses of 3.03 billion baht, compared with profits of 383.9 million. Nine-month losses were 2.99 billion baht compared with a loss of 703.24 million the same period last year. The bank attributed the loss to 3.69 billion baht in provisions set aside in the third quarter. Operating profit before extraordinary items for the quarter was 430 million baht, or 120 percent higher than the same period last year, with interest and dividend income up 56 percent and non-interest income down 34 percent. The bank set aside $57.9 million, or 1.98 billion baht, in allowances for investment losses for its holdings in offshore collateralised debt obligations (CDOs). At the end of September, the bank had $330 million in CDO investments, of which $70 million were in sub-prime mortgage assets through $50 million in Coriolanus Series 39 and $20 million in Rutland Rated Investment. The additional provisions come on top of $65.9 million in provisions set aside in the second quarter against the investments. To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com. Copyright (c) 2007, Bangkok Post, Thailand Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. [ Back To TMCnet.com's Homepage ]