Shareholders of SET-listed construction company Demco saw their investment value drop by 17% at one point yesterday in panic selling after the largest shareholder of an associate firm was reportedly involved in a scandal linked to former Central Investigation Bureau chief Pol Lt Gen Pongpat Chayapan.
Demco shares opened yesterday on a negative note, falling to 14.90 baht and headed south further to the day's trough of 13.50 baht before bounding back to close at 14.40 baht, an 11.7% fall.
Nopporn: Arrest warrant issued
The selling spree came after reports emerged that Nopporn Suppipat, who holds a 63% stake in Wind Energy Holding, allegedly hired Pol Lt Gen Pongpat's network to force his creditor, Bandit Chotwitthayakul, to slash his debt to 20 million baht from 120 million.
The police have already issued an arrest warrant for Mr Nopporn.
Shortly after police identified Mr Nopporn as the man who had hired the network to negotiate his debt cut, rumours circulated on social networks about his investments in Wind Energy and Sustainable Energies. Both companies were founded by Mr Nopporn, who made Forbes' list of the country's richest people, with an estimated net worth of US$800 million.
Demco holds a 4% stake in Wind Energy Holding and 30% in Sustainable Energies' Kao Ko project.
To soothe investors' jitters, Demco yesterday clarified in a filing to the Stock Exchange of Thailand that the company had not received any dividends from its investment in Wind Energy Holding.
It has earned dividends of 116 million baht since April and another 50 million this month from its 25%-owned affiliate, Aeolus, which in turn holds a 60% stake in Wind Energy Holding's two wind power projects — Huoy Bong 2 and Huoy Bong 3.
The two projects feed a combined 103.5 megawatts into the power grid.
Demco also said it started constructing Sustainable Energies's Kao Ko wind project this month, expected to be completed next year.
Managing director Phongsak Siricupta said the scandal had nothing to do with Wind Energy Holding.
The company's initial public offering (IPO) will remain on track, he said.
Maybank Kim Eng Securities (Thailand) said Demco had a 38% downside risk from Monday's closing price in the worst-case scenario that the scandal did escalate to derail Wind Energy Holding's planned IPO next year.