A plan to restructure the debts of Thonburi Automotive Assembly Plant (TAAP)
totalling Bt27.4 billion (US$633 million) has been accepted by the Central Bankruptcy
Court in Bangkok, with debt payments due to recommence in June.
This comes almost 18 months after the company stopped interest payments due
to lack of funds and seven months after the financially troubled Mercedes-Benz
assembler thought its first rescue plan had been approved.
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Under the plan, drafted by PriceWaterhouseCoopers, Thonburi will be renamed
Thonburi Automotive Group Company (TAGC) within eight weeks.
The Viriyaphant family, 100 percent owners of Thonburi, will see their stake
in the new firm cut to 27 percent, with the remaining 73 percent to held by
creditors. TAAP will however keep control over day-to-day operations as creditors
will have only two seats on the 11-member management board.
If over the next six years the firm were to achieve 4 percent annual growth
and repay Bt3.5 billion (US$80.8 million), the Viriyaphant family can secure
an additional 48 percent of TAGC’s equity for free. And, once a further repayment
of B2 billion (US$46.2 million) is made by the family over the next four years,
the Viriyaphants have the right to buy back TAGC’s remaining 25 percent of equity
at the market price.
Fixing Thonburi’s debt at Bt5.6 billion (US$127 million), which is almost
a fifth of the original outstanding US$633 million, converting the debts into
creditor’s equity in TAGC and rescheduling the loan repayments in line with
revenue generated, means that TAAP is able to recommence business.
Assembling Mercedes-Benz vehicles currently provides the main income for TAAP’s
manufacturing operation.
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