Bankruptcy court to rule on Saha Farms

Bankruptcy court to rule on Saha Farms

Ailing poultry supplier owes 360 million baht

Chicken farmers under contract with cash-strapped Saha Farms yesterday submitted a letter to Krungthai Bank (KTB) asking for the bank to allow the company to pay them ahead of creditor banks, saying that they were heavily indebted after two years of overdue payments, said Wasana Nakdiloc, a representative of the Chicken Action Network.

Saha Farms owes a combined 360 million baht to some 500 farmers in 18 provinces.

The latest action by chicken farmers followed a muted response to their request at a recent meeting of their representatives, Saha Farms, Ernst & Young and KTB.

The Bankruptcy Court has slated the first hearing on whether Saha Farms will enter the business rehabilitation process for next Monday. If the court approves the rehabilitation, Ernst & Young will be appointed as the plan’s adviser.

KTB is the financially ailing chicken company’s largest creditor, with total lending of 5 billion baht.

Thanachart Bank is expected to be owed 1-2 billion baht, while Siam Commercial Bank, the third-biggest bank by total assets, is also a creditor of Saha Farms, with a credit line of 500 million.

Saha Farms is facing the liquidity crunch due to losses incurred last year from rising animal feed and labour costs along with this year’s baht appreciation.

The group was in the limelight last year when migrant workers, mainly from Myanmar, staged a protest at the factory producing frozen chicken in Lop Buri’s Chai Badan district, demanding overdue wages after the company failed to pay their salaries.

The bank reportedly agreed in principle to pump fresh funds of 1 billion baht into the company to boost its liquidity so that it would be able to keep running its business.

Meanwhile, a poultry industry source said the downfall of Saha Farms would be a windfall for other major producers.

The source, who requested not to be named, said that key poultry producers and exporters had filled Saha Farms’ poultry production since the company had been mired in financial difficulties since 2012.

Previously the cash-strapped producer had a 20-25% market share, exporting 84,000 tonnes of cooked poultry products a year.

“Other poultry exporters have expanded their capacity to replace Saha Farms’ market share, and prices have increased on short supply,” said the source.

Presently, Saha Farms produces 20% of its previous capacity and exports only 10% of its earlier figures.

From 2011-12, the price of live chickens fell sharply to 27-28 baht a kilogramme due to serious oversupply in the domestic market.

However, since the halt of Saha Farms’ operations, prices have continued to surge, with the figure now standing at 38 baht per kg.

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