The biggest shareholder in Thai Airways International (TG, Bangkok Suvarnabhumi) is reportedly losing enthusiasm for a capital increase given the carrier's improved financial position, according to The Bangkok Post. The capital injection is a key component of Thai's business rehabilitation process, which also includes a capital restructuring and debt-to-equity conversion scheme. The airline hopes to raise as much as THB80 billion baht (USD2.3 billion) by issuing bonds and converting debt into equity.
The Ministry of Finance, Thai's top shareholder with a 47.86% stake, had set aside around THB12.5 billion (USD359 million) for the planned capital increase. But the newspaper cites Tibordee Wattanakul, director-general of the State Enterprise Policy Office, as saying that it and the ministry are "reviewing the need for an additional capital injection into Thai Airways." The State Enterprise Policy Office is a Ministry of Finance agency and oversees state-owned enterprises.
"The company's performance has been consistently good, prompting shareholders, including the ministry, to reconsider whether a further capital infusion is necessary," he said.
Earlier this month, Thai Airways reported a THB12.48 billion (USD360 million) net profit for the three months to September 30. Thai's "plan administrators", who are managing the business rehabilitation process, favour a capital raise. Wattanakul said no final decision had been made and that input from other shareholders is needed.
Thai Airways owes its top shareholder around THB12.83 billion (USD368.5 million). Much of that stems from loans and bailouts provided to the airline in the pre-pandemic era. The ministry is participating in the debt-to-equity scheme and plans to convert 100% of its debts. However, even after doing that and even if proceeding with the capital increase, the capital restructuring will see its overall stake shrink to 35.81%.
While supportive of the process, Wattanakul says the appropriate debt-to-equity swap ratio needs to be reconsidered. “The ratio has been initially set at 24.5% and could be further increased if the airline continues reporting a strong performance,” he said. He added that increasing the ratio would allow shareholders to recoup their money sooner, assuming Thai maintains its buoyant financial performance.
After completing the capital restructure, Thai Airways hopes to exit the business rehabilitation process shortly afterwards and recommence public trading on the Bangkok bourse in 2025.
