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Baht/$ 35.50/54 (Bid/Ask)
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NUNTAWUN POLKUAMDEE
TSFC Securities is in danger of collapsing as the company has not provided clear details about its recapitalisation.
The Securities and Exchange Commission yesterday rejected the TSFC business rehabilitation plan and asked it to submit more details by Dec 11 about plans to raise 279 million baht.
If the plan is rejected, TSFC would become the first Thai capital-market casualty of the global financial crisis and seriously damage investor sentiment.
TSFC offers margin loan services and securities repurchase services for the local securities sector.
The cash-strapped company is facing liquidity problems as it lost money investing in debt instruments and stocks in volatile markets in recent months.
Based on its capital base of one billion baht, TSFC is allowed to invest up to 13 times that amount.
The company is 10.73% owned by the Finance Ministry, 26% by the central bank's Financial Institutions Development Fund, 20% by commercial banks, 10% by state enterprises and the remainder by other shareholders.
If TSFC cannot raise capital, it cannot invest or expand business. Borrowing would be difficult as any new creditors would be subordinate to existing ones.
Thirachai Phuvanatnaranubala, the SEC secretary-general, said the liquidity problem at TSFC would not affect stock trading, clearing and settlement as TSFC did not have a brokerage licence.
"TSFC did not call its margin-loan borrowers to repay debts or force them to sell their stocks to make repayments. However, if any customers want to move their margin loans to other securities companies, they can do that," he said.
To create fairness for unitholders of mutual funds, which invested in bills of exchange issued by TSFC, the SEC will allow a third-party asset manager to separate BEs from the portfolio. These would be excluded from calculations of net asset values and the BE holders would not be affected if TSFC closed.
Tris Rating last month downgraded TSFC to BB- from BBB- and placed it on credit alert with a negative outlook.
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