The future of Thai Airways International's privatisation programme may hinge on a deal with an unlikely source - the International Monetary Fund - as a result of strings attached to a US$16 billion rescue package for the beleaguered Thai economy.
The poser for the Thai government is that the IMF has claim on any proceeds from state privatisation programmes, a rider which has already put the two ministries involved in Thai's privatisation at loggerheads.
Transport Ministry officials, supported by the carrier's management, want the Finance Ministry, which holds 93 per cent of the stock, to sell 150 million existing shares, along with an issue of 100 million new shares. But the Finance Ministry argues 200 million new shares should be offered instead because it fears the IMF could claim the takings from the sale of existing shares. The fund can't touch income from new stock and Thai needs the fresh capital to strengthen its balance sheet; the carrier has a 3:1 debt:equity ratio.
Transport minister Suwat Liptapallop has set up a committee to settle the dispute. Either way the state holding will be cut to around 80 per cent. But with the state planning to cut its stake to less than 50 per cent over the next few years, Bangkok will have to try to renegotiate the terms of its IMF loan or the carrier will be deprived of any capital raised in subsequent issues.
The planned sell-off suffered a further setback in October when the carrier, hit by a slump in traffic and exchange losses as a result of the crises in the region warned of a 15 per cent drop in earnings for the year to 30 September.
Source: Airline Business
