Aot To Take Legal Action Against Defiant King Power

[george]

AOT to take legal action against defiant King Power

BANGKOK: -- Airports of Thailand (AOT) has resolved to take legal action against King Power Interna-tional Group, the operator of duty-free shops, for failing to remove its outlets from Suvarnabhumi Airport, board member Chirmsak Pinthong said yesterday.

The AOT executive board also decided to sell AOT's stake in Thai Airports Ground Ser-vices (TAGS), which handles ground services at the airport.

It will also examine a contract that employs TAGS to manage the airport's duty-free zone, to see whether it is paying too much.

AOT pays TAGS Bt21 million a year to manage the zone, based on a 16.5-per-cent management charge.

The board views the payment as unfair and is ordering AOT to sell its 18-per-cent stake in TAGS to create transparency after an examination of the contract is carried out.

The board's decision on King Power came after its instruction to the company to remove its shops in March last year appears to have been ignored.

King Power's failure to comply prompted AOT's board on Tuesday to engage lawyers to take action against it.

The board also yesterday ordered King Power Suvarnabhumi, a subsidiary of King power, to remove its tenants at the airport. The subsidiary manages commercial space at the airport.

The firm, which sublets space, was told that the concessions granted in March 2006 by the former AOT board had violated the Public-Private Joint Venture Act.

This omission was deemed as sufficient reason to withdraw the concessions.

The board said some key information had not been disclosed when the concession was granted by the former board.

The current board has

asked the National Counter Corruption Commission to investigate whether there are any officials or people involved in the failure to disclose this information, as required under the Public-Private Joint Venture Act.

The commission has been asked to take disciplinary action and file civil cases against people who violated the act.

The concession was granted during the Thai Rak Thai-led government two years ago.

Yesterday's legal move by the AOT came as a surprise. It was expected that the board would leave the matter to the new government to tackle.

Some industry sources had expected the issue would be settled out-of-court as the People Power Party, consisting of ex-Thai Rak Thai Party members, is expected to play a key role in the new government.

Chirmsak, however, said it had decided to take legal action fearing the statute of limitations would render the case void when it ends this March, one year after the board's order to oust the company from the airport was issued.

Earlier on, King Power filed a counter-lawsuit against the AOT board, seeking damages worth Bt68 billion for withdrawing its concessions.

The AOT board took the latest move after recommendations were made by a fact-finding committee led by former senator Prathin Santiprapob.

-- The Nation 2008-01-10

[cclub75]

The board's decision on King Power came after its instruction to the company to remove its shops in March last year appears to have been ignored.

Always a good laugh with Nation.

[Lilawadee]

Well, I'm all in favour of anything that shakes up the abysmal duty free situation that has plagued Thai airports for decades.

Like, for starters, duty free is intended to be 'good value'. If costs are higher than on the street then it's just a big scam.

[makavelithedon]

The board's decision on King Power came after its instruction to the company to remove its shops in March last year appears to have been ignored.

Always a good laugh with Nation.

Even more so King Power! How they're allowed to call themselves 'Duty Free' is beyond me. They are the most expensive Asian 'Duty Free' I have ever come across! Always have a laugh when I see there 'discounted' luxury wristwatches that my local one man band watch shop sells for 20% less than them before you even haggle for discount!

Just another of Thailand's cartel rip off merchants!!!

Kick'em out on the street where they belong!

[Prakanong]

Well, I'm all in favour of anything that shakes up the abysmal duty free situation that has plagued Thai airports for decades.

Like, for starters, duty free is intended to be 'good value'. If costs are higher than on the street then it's just a big scam.

Exactly.

Why does AOT not just lock out King Power one night?

Just revoke the security badges of all staff - easy peasy but TiT

[John K]

Correct me if a am wrong, but is not the reason they had to go was because if a sweetheart deal with the Thaksin government and they were awarded their contract unfairly? Sounds like they were just waiting around for Mr. T. to come back and start complexly ignore rulings and laws again.

[TAWP]

Old habits die hard...

[hammered]

I was amazed at the prices of their duty free goods, but I rarely fly these days. It seemed to me also their monopoly was also assisted a bit in that you werent allowed to take any alcohol bought locally at cheaper prices on the plane due to security restrictions. I am not sure if that has changed now but it did strike me that the security regs did allow a bit of gorging by any duty-free.

[Prakanong]

Correct me if a am wrong, but is not the reason they had to go was because if a sweetheart deal with the Thaksin government and they were awarded their contract unfairly? Sounds like they were just waiting around for Mr. T. to come back and start complexly ignore rulings and laws again.

Do you have a picture of him next to your bed - obsesion is a strange phenonema!

Thaksin governemtn or other Thai institutions the Junta has had over a year to remove them - just like laying all of the charges against Thaksin they seem not to be able to move quickly on this.

Maybe like the human rights abuses of extra judicial killing of drug dealers going after Thaksin would mean others would also have to be indicted for this and maybe powerful groups are involved in all of it and not just the object of you obsession acting alone like some omnipotent and omnipresent meglomaniac.

Pleaee do not take it I anyway am supporting thaksin just because I do not buy the line corruption, rent seeking, venality and abuse of power started and ended with him - please try and gain some perspective.

[Tony Clifton]

I find the opportunist use of the name "King Power" combined with their shaky business practices are actually quite an insult.

[Thai at Heart]

Well, I'm all in favour of anything that shakes up the abysmal duty free situation that has plagued Thai airports for decades.

Like, for starters, duty free is intended to be 'good value'. If costs are higher than on the street then it's just a big scam.

Exactly.

Why does AOT not just lock out King Power one night?

Just revoke the security badges of all staff - easy peasy but TiT

Just stop the employees riding on the bloody tourist transfer buses would be enough. None of the would even get to work.

[John K]

Correct me if a am wrong, but is not the reason they had to go was because if a sweetheart deal with the Thaksin government and they were awarded their contract unfairly? Sounds like they were just waiting around for Mr. T. to come back and start complexly ignore rulings and laws again.

Do you have a picture of him next to your bed - obsesion is a strange phenonema!

Thaksin governemtn or other Thai institutions the Junta has had over a year to remove them - just like laying all of the charges against Thaksin they seem not to be able to move quickly on this.

Maybe like the human rights abuses of extra judicial killing of drug dealers going after Thaksin would mean others would also have to be indicted for this and maybe powerful groups are involved in all of it and not just the object of you obsession acting alone like some omnipotent and omnipresent meglomaniac.

Pleaee do not take it I anyway am supporting thaksin just because I do not buy the line corruption, rent seeking, venality and abuse of power started and ended with him - please try and gain some perspective.

Just a quick question that you don’t really need to answer, but what way is your post connected to mine as mine was a question? A simple yes or no or clarification would have been the appropriate and desired reply. The fact that they were ruled not to be there and they still are is what this thread is all about and not the creative response you gave.

[jackspratt]

Correct me if a am wrong, but is not the reason they had to go was because if a sweetheart deal with the Thaksin government and they were awarded their contract unfairly? Sounds like they were just waiting around for Mr. T. to come back and start complexly ignore rulings and laws again.

Do you have a picture of him next to your bed - obsesion is a strange phenonema!

Thaksin governemtn or other Thai institutions the Junta has had over a year to remove them - just like laying all of the charges against Thaksin they seem not to be able to move quickly on this.

Maybe like the human rights abuses of extra judicial killing of drug dealers going after Thaksin would mean others would also have to be indicted for this and maybe powerful groups are involved in all of it and not just the object of you obsession acting alone like some omnipotent and omnipresent meglomaniac.

Pleaee do not take it I anyway am supporting thaksin just because I do not buy the line corruption, rent seeking, venality and abuse of power started and ended with him - please try and gain some perspective.

There's obsessions, and obsessions.

Was John wrong? - if so, you should feel free to correct him, and help us all at the same time.

[Prakanong]

Correct me if a am wrong, but is not the reason they had to go was because if a sweetheart deal with the Thaksin government and they were awarded their contract unfairly? Sounds like they were just waiting around for Mr. T. to come back and start complexly ignore rulings and laws again.

Do you have a picture of him next to your bed - obsesion is a strange phenonema!

Thaksin governemtn or other Thai institutions the Junta has had over a year to remove them - just like laying all of the charges against Thaksin they seem not to be able to move quickly on this.

Maybe like the human rights abuses of extra judicial killing of drug dealers going after Thaksin would mean others would also have to be indicted for this and maybe powerful groups are involved in all of it and not just the object of you obsession acting alone like some omnipotent and omnipresent meglomaniac.

Pleaee do not take it I anyway am supporting thaksin just because I do not buy the line corruption, rent seeking, venality and abuse of power started and ended with him - please try and gain some perspective.

There's obsessions, and obsessions.

Was John wrong? - if so, you should feel free to correct him, and help us all at the same time.

The man is a one track record and even in cases when he was shown to be wrong ie ownership of Cyber World by a JV between Charoen and Capitaland he makes up imaginary friends with supposed connections to claim otherwise.

I bet he is great company to be out with being a single subject obsessive.

[Prakanong]

And these guys are pointing to a compromise deal when the new govt is in power

"Management has mentioned in the latest meeting that if the dispute with King Power is transferred to the Administrative Court by the end of 2007, the process would be much quicker. Furthermore, revenue recognition from duty free concession would be the windfall for AOT, given that the company has already booked the related expenses, including income tax, in FY07, which was another factor that depressed profit that year.

The settlement between AOT and King Power is expected to be more on a compromising basis, under the newly elected government. Nonetheless, this revenue has not been included in earnings projection, which could almost double from the current forecast. This should be the short-term share price catalyst for AOT.

A BUY call is reiterated on the counter with DCF-based target price of Bt80/share (based on WACC of 9.2% and terminal growth of 3%). This implies 40% total return.

(DBS Vickers Securities (Thailand): 28 December 2007)

Copyright 2007 Thai News Service, Source: The Financial Times Limited "