THAI wary of Nok Air shares float

THAI wary of Nok Air shares float

Source says clearer rehab plan is needed

Thai Airways International (THAI) Plc has backed away from buying new shares raised by its affiliate Nok Air to increase its capital because the loss-making budget carrier's rehabilitation plan remains unclear and its chief executive must be replaced, says a source at the flag carrier.

Patee: Releasing statement today

Nok Air earlier announced a plan to increase its registered capital from 625 million baht to 1.41 billion. It said 625 million of the new shares will be allotted to existing shareholders at a ratio of one existing share to one new share. The shares were scheduled to be booked for purchase from May 16-19 and May 22.

However, THAI, which holds a 39.25% stake in Nok Air, decided not to buy the shares, the source said, citing the company's extraordinary board meeting on May 21, a day before the closing date of the share purchase booking.

In the meeting, the source said there were debates for and against the purchase of Nok Air shares, but finally they concluded not to buy any because the airline's plan to tackle losses is still unclear.

The board also issued a condition that Nok Air must replace its chief executive Patee Sarasin before THAI would buy any shares, the source noted. Mr Patee remains in the position.

The source said the board members who supported buying shares pointed out if THAI fails to raise Nok Air's capital, the budget carrier would seek more capital from a Singaporean partner.

Nok Air reported a net loss of 295 million baht in the first quarter this year. It posted a net loss of 2.8 billion baht last year.

The source said with THAI's retreat from the purchase of Nok Air shares, it is possible Nuttapol and Thaweechat Jurangkool, who hold stakes in the budget carrier of 12.08% and 10.21%, respectively, could become the largest shareholders in the firm.

Mr Patee may believe this restructuring would allow him to maintain a grip on his job, the source said.

When asked whether he would continue in his post, Mr Patee gave an "okay" hand signal, but added he needs clarity from THAI.

Mr Patee said he would release a statement today. He refused to say what it is about, but insisted it would be good news.

Damrong Waikanee, president of THAI's labour union, said his organisation agreed with the THAI board's decision, saying the national carrier has been struggling with losses the past couple of years. But he said he was unaware of the board's decision, as he was told that THAI was committed to increasing capital in Nok Air as it feared an airline from Singapore could step in to buy the shares.

THAI's 39.25% stake means the firm does not have full management power of Nok Air and cannot fully tackle its problems, said Mr Damrong.

THAI shares closed yesterday on the SET at 18.20 baht, up 40 satang, in trade worth 153 million baht. NOK shares closed at 4.60 baht, down six satang, in trade worth 4.12 million baht.

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