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Finance Ministry 'to sell 3 per cent of THAI stake to Vayupak Fund 1'


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Finance Ministry 'to sell 3 per cent of THAI stake to Vayupak Fund 1'

By THE NATION

 

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The Ministry of Finance will sell a part of its stake in Thai Airways International Plc (THAI) following the Cabinet’s resolution to reduce its shareholding to less than 50 per cent and end THAI's status as a state emterprise, the State Enterprise Policy Committee (SEPC) said.

 

 

“The Ministry of Finance notified the Securities and Exchange Commission [SEC], the Ministry of Transport and THAI on Friday [May 22],” SEPC director Prapas Kong-led said on Friday. “THAI will later have to notify the Stock Exchange of Thailand of its share status and that it is no longer a state enterprise, although the SEC may not officially declare this immediately.”

 

A source from the Ministry of Finance revealed that the ministry would sell 3 per cent of its shares in THAI to Vayupak Fund 1, which is jointly managed by Krungthai Asset Management Plc and MFC Asset Management Plc. This will lower the ministry’s shareholding in THAI from 51.03 per cent to 48 per cent and free THAI of state enterprise regulations which should facilitate the rehabilitation plan.

 

According to SET data as of April 1, the five major shareholders of THAI are:

 

▪︎ Ministry of Finance, holding 1,113,931,061 shares or 51.03 per cent

 

▪︎ Vayupak Fund 1 under MFC Asset Management Plc, holding 165,037,582 shares or 7.56 per cent.

 

▪︎ Vayupak Fund 1 under Krungthai Asset Management Plc, holding 165,037,582 shares or 7.56 per cent

▪︎ Thai NVDR Co Ltd, holding 71,645,528 shares or 3.28 per cent

 

▪︎ Government Savings Bank, holding 46,409,885 shares or 2.13 per cent

 

Source: https://www.nationthailand.com/news/30388364

 

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-- © Copyright The Nation Thailand 2020-05-23
 

 

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56 minutes ago, Misterwhisper said:

As long as the Thai state is still hanging on to almost 50% of ownership, there can be no rehabilitation. Even with "only" 48%, the Finance Ministry - and by extension meddling officials and politicians - will still have way too much sway and clout over the airline. Thai Airways (if not scrapped for good) should be fully privatized.

 

I am also a little suspicious about the other major shareholders. "Government Savings Bank" with 2.13%? Isn't that a state-controlled financial institution? And what about that dodgy sounding "Vayupak Fund 1" that soon will hold a not so shabby 15.12%? Who are the controlling shareholders there?

 

Somehow I have the impression that nothing will change as per Thai Airways ownership as shares are simply shifted around among the very same entities that ALREADY are the main shareholders anyway. 

Indeed Mr W .. This is a smoke and mirrors exercise ..

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59 minutes ago, Misterwhisper said:

 

 

Somehow I have the impression that nothing will change as per Thai Airways ownership as shares are simply shifted around among the very same entities that ALREADY are the main shareholders anyway. 

I think that is exactly what is happening. THAI is fully ingrained in the establishment here (just look at the flights they have still been running during the pandemic) and will never be able to become fully privatised. 

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The government is trying to obfiscate the fact they will sink millions of extra tax money in this sinking ship just for the status, job opportunities, and brown envelopes.

 

Nothing will change, and they have no reason to even consider changing anything unless there is some huge public outcry.

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 it is very much smoke and mirrors, but , at some point, as the smoke clears, Thailand's financial reputation and standing in the world is going to take something of  a dive.

As others have pointed out, it is just not possible to separate out Thai Air from the Thai Government. Now they are trying to wash their hands of it.  

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2 hours ago, Misterwhisper said:

And what about that dodgy sounding "Vayupak Fund 1" that soon will hold a not so shabby 15.12%?

You are completely right. This is a fund built on Government Bonds. There was already 2012 talks about shifting ownership of both Thai and PTT to this fund, which is controlled fully by the government.

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What gets me is this that the Gov't should not be making these decisions if Thai has officially declared bankruptcy. They have no right to do so.

The International Receivers & Accountancy firm who will in turn appoint specialists to  assess whats best.

Not a Government who has already shown it has no idea how to run an airline let alone one that is 

perfectly placed in geographic terms to be a great success

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This is going to be fun to watch.  My guess is that Thai will enter 'Administration'.  The appointed administrators will make a huge fee to find a new owner for Thai.  The new owner will sell off all the decent assets and leave a Face Saving state flag carrier. and the name will be Royal Thai Airlines 2020.  Lots of money to be made here.

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5 hours ago, rooster59 said:

▪︎ Ministry of Finance, holding 1,113,931,061 shares or 51.03 per cent

 

▪︎ Vayupak Fund 1 under MFC Asset Management Plc, holding 165,037,582 shares or 7.56 per cent.

 

▪︎ Vayupak Fund 1 under Krungthai Asset Management Plc, holding 165,037,582 shares or 7.56 per cent

 

▪︎ Thai NVDR Co Ltd, holding 71,645,528 shares or 3.28 per cent

 

▪︎ Government Savings Bank, holding 46,409,885 shares or 2.13 per cent

So basically still state controlled... no new face is going to have a free say in anything, this is just window dressing.

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Judging from a number of comments to my original assessment, I was spot on.

 

Nothing's going to change in de-facto ownership by simply redistributing a tiny percentage of the Finance Ministry's majority shareholdings to other, thinly-disguised government-controlled entities.

 

Meanwhile, Mr. Prayuth has announced that due to bankruptcy proceedings no debts that the airline has accumulated will be settled and no creditor claims will be honored.

 

Can it really be that easy?

 

In a few years they are going to pull off the same charade again. Unfortunately, there still will be more than enough gullible investors who once again sink money into a state-controlled enterprise that can at any point "cancel" all debts at the whim of the government.

 

Now the Thais reportedly are moving to file for bankruptcy in the U.S. as well in order to "prevent U.S. creditors from seizing aircraft and other Thai Airways assets". I really hope the U.S. courts are not going to have the wool pulled over their eyes in such a blunt manner. Nor should the Europeans. But I fear they will allow themselves to be duped all the same.   

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Unbelievable and what a bunch of sorry hogwash fatheads these people are. If they try to declare bankruptcy in the USA courts they will be denied. On the other point my daughter got her official notice of you are fired. My guess is they are keeping everyone who is attached to someone for how they got the job. Nothing changes.

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The " smoke and mirrors"  is in the way the story has been spun. 

 Also in the device of using  what is effectively  a Government controlled fund, to reduce the Thai Govt shareholding to under the 50% threshold, and so passing on (knowingly)  to that fund's holders a piece of a (likely) worthless asset. 

In doing this they have neatly hung the Thai Airways bond holders out to dry. These include many Thai employment provident funds and co-ops who bought the bonds on the assumption that Thai Air was subject to a state guarantee, and so backed by the full faith and credit of the Thai Govt. The Rating Agency also assumed this  which is why, prior to this week, these bonds had high Investment grade ratings, there was a presumption of Thai Government backing.

In the past both Thai Air and the Thai Govt were able to make use of this presumption of state backing to fund the airline at a significantly lower cost than would have otherwise been available to it.

The shares are likely to be suspended at some point and they are (i guess)  of zero value and the bond holders will likely have their coupons suspended and be subject to capital loss. 

The International creditors will recruit armies of lawyers. The behavior of the Thai Government will be the subject of some future scrutiny, i would think.

 

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5 hours ago, Misterwhisper said:

I am also a little suspicious about the other major shareholders. "Government Savings Bank" with 2.13%? Isn't that a state-controlled financial institution? And what about that dodgy sounding "Vayupak Fund 1" that soon will hold a not so shabby 15.12%? Who are the controlling shareholders there?

"Government Savings Bank" is owned by the state, and "Vayupac Fund" is run by "Krungthai Bank" who are - state owned.

 

So when the smoke clears and you look past the mirrors, some 65% of the shares in Thai will still be owned by the state, in one form or the other.

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8 minutes ago, holy cow cm said:

If they try to declare bankruptcy in the USA courts they will be denied.

What happens if the US courts deny them bankruptcy; will the rest of the world follow suit? Will that mean that international creditors, of which there are no doubt many, will be able to persue Thai for debts in the US courts, or in those of any other third country in which they have a presence?

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1 hour ago, natway09 said:

What gets me is this that the Gov't should not be making these decisions if Thai has officially declared bankruptcy. They have no right to do so.

The International Receivers & Accountancy firm who will in turn appoint specialists to  assess whats best.

Not a Government who has already shown it has no idea how to run an airline let alone one that is 

perfectly placed in geographic terms to be a great success

I haven't seen any announcement that THAI has actually filed formally for bankruptcy with the court; only that the government intends that to occur. So the State as majority shareholder would still be free to sell any of its shares to whomever it chooses before such filing. It could have made a private sale to a non-government entity such as a privately owned enterprise.

Once filed in court all such stock actions cease and must gain approval of the court under a formal court approved bankruptcy plan.

If all the government has done with the subject 3% is move it to state controlled entity before formal bankruptcy filing, it is frozen there after the filing and becomes part of any court bankruptcy plan.

In short the sale/transfer doesn't appear to have any relevance other than what some OP's point to 'smoke & mirrors.' Maybe buys time to delay filing bankruptcy to show the government is taking a lead in the airline problem?

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5 minutes ago, herfiehandbag said:

What happens if the US courts deny them bankruptcy; will the rest of the world follow suit? Will that mean that international creditors, of which there are no doubt many, will be able to persue Thai for debts in the US courts, or in those of any other third country in which they have a presence?

Wait and see. But why should the US courts release them from a debt burden when they are obviously still state owned. They need to get 100% out from Thai Airways and stop trying to pretend to the world that it is bonafide restructuring. The world does not owe them their airlines. If they feel that way then go get their planes from China or Russia. 

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This issue could become even more toxic for the Thai Government if there is any suggestion or suspicion that there has been any difference in the treatment of Thai entity creditors vs the international creditors. Or, if the principals of creditor hierarchy are not strictly applied eg if  lower ranking (eg Thai) creditors take any kind  precedence (or get any kind of  special treatment or favor) over other ( lets say international) creditors.

This will all have to be conducted under the glare of international scrutiny. And the legal process will not be fully under Thai Govt control.

Not something this Government will be particularly comfortable with, I suspect.

Edited by wordchild
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They may be able to get a debt reduction on outstanding debt although I am not sure of that.  BUT the problems are going to show up when they want to land at foreign airports, use foreign facilities, get repairs to aircraft while on the ground, buy anything.  Let's face it if their credit is not good and the same people are running the company and holding the stocks no one is gong to want to do business with them based on credit.

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On 5/23/2020 at 12:00 PM, Misterwhisper said:

As long as the Thai state is still hanging on to almost 50% of ownership, there can be no rehabilitation. Even with "only" 48%, the Finance Ministry - and by extension meddling officials and politicians - will still have way too much sway and clout over the airline. Thai Airways (if not scrapped for good) should be fully privatized.

 

I am also a little suspicious about the other major shareholders. "Government Savings Bank" with 2.13%? Isn't that a state-controlled financial institution? And what about that dodgy sounding "Vayupak Fund 1" that soon will hold a not so shabby 15.12%? Who are the controlling shareholders there?

 

Somehow I have the impression that nothing will change as per Thai Airways ownership as shares are simply shifted around among the very same entities that ALREADY are the main shareholders anyway. 

The VA gives it away doesn't it haha

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