Energy Earth hashes out fiscal woes
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Energy Earth hashes out fiscal woes

Creditors continue to knock at the door

Beleaguered Energy Earth Plc (EARTH) has clarified to the Stock Exchange of Thailand (SET) the reasons for the company's submission for business rehabilitation to the Central Bankruptcy Court.

The need for rehabilitation has impacted the company's credibility and resulted in a significant decrease in business operations.

Many suppliers have subsequently looked to settle up as the company has received collection letters from several debtors, which Energy Earth refused to repay due to a lack of means, the company said in a statement filed to the SET.

"If our creditors and suppliers proceed with their legal actions against us, this will cause [Energy Earth] to have liabilities exceeding its assets," the statement read.

Prior to the date that the company's board of directors had resolved to approve the submission [of a business] rehabilitation petition plan to the Central Bankruptcy Court, Energy Earth's suppliers had initiated legal action against company for debts in excess of 26 billion baht.

"The company will defend the case in court accordingly," the statement read.

Energy Earth has total assets of 31.8 billion baht and 46.5 billion in total liabilities.

Of its total debt, 11 billion baht is owed to financial institutions, 5.5 billion stems from bond issuance, 2.4 billion is from bills of exchange, 938 million is for trade accounts payable and other payable.

Moreover, the company owes 1.21 billion for short-term loans offered through its subsidiaries, while 26 billion is for provisions of contingent liabilities.

Its remaining debt is for other liabilities, the company said.

The company's clarifying statement is not expected to have much impact as its business rehabilitation petition has shown that the company has no financial liquidity and needs to find a solution to recover its business, said Sukit Udomsirikil, managing director at Maybank Kim Eng Securities Thailand.

"The statement is probably aimed at ensuring that the company can still operate its business," said Mr Sukit.

Trade in Energy Earth shares was suspended on June 15 this year because the company defaulted on 5.5 billion baht in bonds, subsequently affecting the company's business operations and financial position.

The SET earlier set a deadline on July 27 for Energy Earth to clarify three key issues after the company filed a petition for business rehabilitation at the Central Bankruptcy Court.

The three issues that Energy Earth needs to clarify to the SET are: an explanation for how the company has more liabilities than assets, details of the debt it has incurred debt based on each group of creditors, and whether the company has any impaired assets.

The regulator's demand for clarification came after Energy Earth's board of directors on July 24 approved a resolution to submit a business rehabilitation petition to the Central Bankruptcy Court.

The Securities and Exchange Commission recently said it would not extend the period for Energy Earth to file a special audit report, saying further delays would hurt the company's shareholders.

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