Restructuring deadline for Shin Corp poses dilemmas

The Straits Times, February 16, 2007
By Leslie Lopez


A LOOMING deadline for Shin Corp to restructure its shareholding organisation is set to pose separate dilemmas for Thailand's military-installed government and a Temasek Holdings-led consortium that controls the conglomerate.

Here's why.

Shin Corp, the publicly listed telecommunications group previously controlled by the family of deposed premier Thaksin Shinawatra, is currently 96 per cent owned by Temasek and its Thai partners.

Thailand's long-standing stock market rules stipulate that any company listed on the exchange must ensure that at least 15 per cent of its shares are held by the public, and Shin Corp faces an end-April deadline set by the Stock Exchange of Thailand (SET) to meet that so-called minimum free float.

That means that Temasek and its partners must sell at least 11 per cent of the shares they own in Shin Corp to independent investors over the next two months.

Failure to do so could result in restrictions in the trading of Shin Corp shares on the SET or possibly a delisting of the company from the Thai stock market.

Temasek executives declined to comment on their plans for the looming share placement exercise.

But placing out the Shin Corp shares is not going to be easy, say several Bangkok-based bankers.

The financial executives say that Thailand's political troubles have sharply dented investor sentiment and Temasek and its partners are likely to face problems lining up new investors to pour money into Shin Corp shares.

'Seeking an extension would be the most logical thing to do given the current investment climate,' says a chief financial officer at a foreign-controlled bank in Bangkok.

Under ordinary circumstances, a maximum sixmonth extension would be granted, bankers say.

But there is a strong political dimension to Shin Corp's troubles, and many bankers say that Thailand's military-installed government may baulk at granting an extension to Shin Corp.

A consortium led by Temasek staged Thailand's largest corporate deal in January last year when it acquired a controlling interest in Shin Corp from Mr Thaksin's family.

The deal stirred widespread controversy and sowed the seeds to the military coup last September that ousted Mr Thaksin.

'For Temasek and its partners, the question is, do they ask for more time knowing full well that they will be turned down,' says a research chief of a Thai stock broking firm, who asked not to be named.

Forcing the Temasek-led consortium to push ahead with the restructuring also carries risks for government.

Bankers argue that should the placement exercise fail, it will cement the view that Thailand's investment environment is weak.

Shin Corp, founded by Mr Thaksin, is one of Thailand's largest conglomerates.

It owns a 42 per cent interest in a satellite operator, Shin Satellite; controls the country's third most popular TV channel; and is the majority shareholder of Advanced Info Service, Thailand's biggest mobile phone operator.