Thai govt. cuts Thai Airways stake to below 51% as part of restructuring plan

[rooster59]

Thai govt. cuts Thai Airways stake to below 51% as part of restructuring plan

 

FILE PHOTO: Thai Airways airplanes are parked at the tarmac of Suvarnabhumi Airport in Bangkok, Thailand March 25, 2020 REUTERS/Jorge Silva

 

BANGKOK (Reuters) - The Thai government lowered its equity ownership in Thai Airways International PcL <THAI.BK> to below 51% by selling a 3.2% stake, a regulatory filing showed, as part of the rehabilitation process for the troubled national carrier.

 

The Thai Finance Ministry offloaded 69.2 million shares to a mutual fund run by state-owned Krung Thai Bank PcL <KTB.BK>, a Finance Ministry filing to the Securities and Exchange Commission (SEC) on Friday showed. The filing did not disclose the sale price.

 

The sale reduced the Thai government stake in Thai Airways to 47.86% from 51.03%, ending the airline's status as a state-owned enterprise, one of the steps included in the restructuring plan of the national carrier.

 

Under Thai law, state-owned companies are governed by a set of management and labour regulations more rigid and restrictive than private companies.

 

Thailand's cabinet earlier this week approved a plan to restructure the airline's finances through a bankruptcy court after rejecting an initial plan to bail out the company through emergency loans.

 

The airline would continue to operate as usual while the restructuring takes place, the company said.

 

Thai Airways has been in financial trouble even before the outbreak of the coronavirus as it posted losses every year after 2012, except in 2016.

 

(Reporting by Panu Wongcha-um and Chayut Setboonsarng; Editing by Muralikumar Anantharaman)

 

-- © Copyright Reuters 2020-05-24

 

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[kotsak]

Smoke and mirrors.. Who are they trying to fool by selling a puny stake to a fund that has government written all over it? 

[JoePai]

3 minutes ago, kotsak said:

Smoke and mirrors.. Who are they trying to fool by selling a puny stake to a fund that has government written all over it? 

They had to - no (other) independent institution would touch TG with a barge pole

[madmitch]

19 minutes ago, kotsak said:

Smoke and mirrors.. Who are they trying to fool by selling a puny stake to a fund that has government written all over it? 

Its a very significant amount, meaning the Finance Ministry's stake is less than 50% enabling the restructure to take place of a privately owned rather than Government owned airline, at least on paper.

 

 

[holy cow cm]

And how can a state owned enterprise be private?

[Misterwhisper]

3 hours ago, rooster59 said:

The sale reduced the Thai government stake in Thai Airways to 47.86% from 51.03%, ending the airline's status as a state-owned enterprise

No, it doesn't. Not when shares are transferred to

 

3 hours ago, rooster59 said:

a mutual fund run by state-owned Krung Thai Bank PcL

and other thinly disguised state-owned entities such as the government-bond backed "Vayupak Fund 1".

 

I said it before and I'm saying it again: There can be no "rehabilitation" of Thai Airways until the airline is fully privatized and made free of government interference. Everything else - such as this shifting around of shareholdings among various government-controlled institutions - is simply smoke and mirrors, with the  government obviously having every intention to continue keeping its greedy fingers in the till.  

[Fex Bluse]

1 hour ago, kotsak said:

Smoke and mirrors.. Who are they trying to fool by selling a puny stake to a fund that has government written all over it? 

They are like teenagers hiding porn magazines in their underwear drawer thinking nobody will find them 

[Fex Bluse]

Let's see if their clever plan can fool the US bankruptcy lawyers and court

[whiteman]

the sky is falling for thai airways at last

[watboy]

It was a very important move the gov't did. Once the Gov't reduced their official stake below 50%, TG lost its status as an State Owned Enterprise and the unions lost the protections they had under SOE labor laws, which are far more protective than for private entities. SOE's basically cannot layoff people, or reduce pay/benefits for any reason. Those protections would prevent any real rehabilitation. If you wanted to cut unprofitable routes, you couldn't cut air crew. If you wanted to rationalize your fleet (I count 9 types in 6 families), you couldn't layoff corresponding pilots or maintenance workers.

 

Its popular to blame bureaucrats for their meddling and leeching of freebies as the cause of TG's problems. While it is a big problem, the union is the biggest problem. For decades they've tried to cap the union. Ground crew are outsourced and not union members, and there's huge differences in pay and benefits. TG was only allowed to have a minority stake Nok Air to keep it from being an SOE, only way it would ever have a chance as a low cost carrier. They tried to freeze hiring of air crew as best they could, but every know and then they would open up recruiting to replace retiring staff and droves of young people and especially cabin crew from other low cost airways would apply to get the benefits of being a member of the TG labor union.

 

With the SOE status gone, business restructuring is possible and thus debt restructuring is possible. I would expect to see the union disbanded and creditors forced to take a haircut, followed by a large portion of debt being converted into equity, further reducing the Gov't's stake.

[Srikcir]

"The filing did not disclose the sale" is irresponsible and must violate government transparency laws.

Purchase was originally made by State taxpayer funds. There should be clear transparency and accountability of such subsequent sale to prove no corruption and/or mismanagement of taxpayer funds.

 

However, if the State admits that the sale was a disguised transfer to another government entity or state-owned entity improperly termed as a "private sale", then the transfer is not in substance a sale to a nongovernment private party and so no further disclosure is required. However, such might be affected by the degree, if any, that THAI has formally filed for bankruptcy.

 

The SEC should review this "sale" for compliance with its regulations and laws to assure public confidence in the legitimacy and adequacy of the information provided by the government on this transaction.

 

 

[Brigand]

Most appropriate OP picture of a sunset with the TG emblem plane tail fins in the center.

[madmitch]

I've seen unconfirmed reports on Twitter that Wissanu will be chairing the restructuring committee.

 

If so, that's probably put the kibosh on the desire for transparency and lack of Government interference even before they've had their first meeting

[Morty T]

So typical thai. First violate their own laws concerning business regulation which has always been 51/49 % ownership. Transfer restructuring over to the evil farang majority owners and then direct all blame when massive layoffs are implemented. Finally, re-nationalize the airline when it's out of the red and take control using the 'laws' requirements of 51/49%. So typical. 

[sead]

This just continues to be more ridicolous. Just as you thought it reached it s peak about stupidity and now they sell shares t a government owned bank. how long can the Thai people just sit and look at what the army are doing. They are purely laughing in their face since the coup..

[sead]

9 hours ago, watboy said:

It was a very important move the gov't did. Once the Gov't reduced their official stake below 50%, TG lost its status as an State Owned Enterprise and the unions lost the protections they had under SOE labor laws, which are far more protective than for private entities. SOE's basically cannot layoff people, or reduce pay/benefits for any reason. Those protections would prevent any real rehabilitation. If you wanted to cut unprofitable routes, you couldn't cut air crew. If you wanted to rationalize your fleet (I count 9 types in 6 families), you couldn't layoff corresponding pilots or maintenance workers.

 

Its popular to blame bureaucrats for their meddling and leeching of freebies as the cause of TG's problems. While it is a big problem, the union is the biggest problem. For decades they've tried to cap the union. Ground crew are outsourced and not union members, and there's huge differences in pay and benefits. TG was only allowed to have a minority stake Nok Air to keep it from being an SOE, only way it would ever have a chance as a low cost carrier. They tried to freeze hiring of air crew as best they could, but every know and then they would open up recruiting to replace retiring staff and droves of young people and especially cabin crew from other low cost airways would apply to get the benefits of being a member of the TG labor union.

 

With the SOE status gone, business restructuring is possible and thus debt restructuring is possible. I would expect to see the union disbanded and creditors forced to take a haircut, followed by a large portion of debt being converted into equity, further reducing the Gov't's stake.

I think you missed the part where it said it sold shares to a government owned bank......  Which means nothing changed.

[realfunster]

5 hours ago, sead said:

I think you missed the part where it said it sold shares to a government owned bank......  Which means nothing changed.

KT is only majority owned by Government, not 100%.

Google indirect shareholding. The likely result is a new direct + indirect shareholding in Thai (On paper) of <50%.

 

[BobbyL]

12 hours ago, madmitch said:

I've seen unconfirmed reports on Twitter that Wissanu will be chairing the restructuring committee.

 

If so, that is incredible, yet fully unsurprising. Wissanu is a man that has shown his role is to protect the establishment. 

[overherebc]

13 hours ago, Morty T said:

So typical thai. First violate their own laws concerning business regulation which has always been 51/49 % ownership. Transfer restructuring over to the evil farang majority owners and then direct all blame when massive layoffs are implemented. Finally, re-nationalize the airline when it's out of the red and take control using the 'laws' requirements of 51/49%. So typical. 

Re' your last two words.

Can I coin a new word?

Thaipical??

[josephbloggs]

14 hours ago, Morty T said:

So typical thai. First violate their own laws concerning business regulation which has always been 51/49 % ownership. Transfer restructuring over to the evil farang majority owners and then direct all blame when massive layoffs are implemented. Finally, re-nationalize the airline when it's out of the red and take control using the 'laws' requirements of 51/49%. So typical. 

So typical TVF.  Post a load of dribble, get some pathetic "evil farang" comments in there, wait for your likes to roll in from the other deluded / paranoid posters.   So typical.

 

Care to explain what you are actually talking about?  I would love to know.  What laws have been violated by the finance ministry divesting itself of some shares?  None.  What has a 51/49% ownership regulation got to do with this?  Nothing.  (The company I work for is 100% foreign owned by the way - and perfectly legal).  Who is going to direct blame to "evil foreigners" and for what?  Nobody, and nothing.  How will the government re-nationalise it according to your made up laws of ownership?  It won't / can't.

Oh, and you do realise that TG has maybe 2% of foreign ownership?  With all your amazing knowledge of how things work you obviously know that.  So, again, what are you actually talking about?

Most ridiculous post I've read in a while (and that is saying something).

 

[watboy]

15 hours ago, sead said:

I think you missed the part where it said it sold shares to a government owned bank......  Which means nothing changed.

 

The TG union has lost their legal protections as an SOE union, that is a real change.

[samran]

16 hours ago, sead said:

I think you missed the part where it said it sold shares to a government owned bank......  Which means nothing changed.

Its no longer a SOE - a whole level of bureaucratic machinery has lost its statutory oversight over Thai. A massively good thing.

 

Given the value of the equity is in reality likely to be close to zero, even with the governments still large direct and indirect shareholdings, the bond holders are likely to have a greater say on what happens next. Probably a good thing all considered.

[Arkady]

On 5/24/2020 at 10:04 AM, kotsak said:

Smoke and mirrors.. Who are they trying to fool by selling a puny stake to a fund that has government written all over it? 

 

including the stakes owned by the Vajupak Fund, which is taxpayers' money, and the Government Savings Bank, the government owns 68%.