SET-listed Thai Union Frozen Products Plc (TUF) has suspended its share offer to finance its US$1.5-billion Bumble Bee Seafoods acquisition deal, and analysts expect the decision will hurt investors' confidence in the company in the near term.
The suspension is a result of an antitrust investigation by the US Department of Justice (DoJ) over that country's packaged seafood industry including TUF subsidiary Tri-Union Seafoods LLC, producer of the popular Chicken of the Sea brand.
TUF, the world's largest processor of canned tuna, had previously set a subscription date of July 20-24 for its preferential public offering (PPO) of 795.3 million shares to existing shareholders at a ratio of six current shares to one new share at a price of 16 baht, it said in a filing with the Stock Exchange of Thailand.
The PPO is aimed at mobilising 13.2 billion baht to finance its buyout of Bumble Bee Seafoods.
Naree Apisawaittakan, a vice-president Phillip Securities (Thailand), expects the PPO postponement will affect TUF negatively in the short term but said whether this would cause a delay in the Bumble Bee deal needed clarification by TUF.
"Analysts are attempting to obtain information from TUF executives but have not managed to get more details," she said.
"Of course, the company will have to disclose the details quickly, as this [the share offer suspension] puts the company's image to investors at great risk."
Regarding the impact on Bumble Bee, Ms Naree said she lacked enough information to analyse the possibility, but in the short term this might cause the deal to be delayed.
"But how long of a delay I really cannot say, so we had best wait for the company to clarify this," Ms Naree said.
Another analyst who declined to be named said TUF decided to postpone the PPO since the investigation was likely to affect investors' confidence in the company, placing the success of the PPO in question.
Bualuang Securities, TUF's financial adviser for the PPO, said the decision would affect the company because it would have to revise its prospectus as well as all document disclosures to the public in order to set a new PPO subscription date.
Securities and Exchange Commission regulations allow the company to relaunch the PPO within six months.
TUF said the subscribing shareholders should receive a full refund in 14 days, and if the company failed to refund in time, the amount would include an extra 7.5% interest.
Rittirong Boonmechote, president of TUF's global shrimp business, declined to comment on the matter, saying he was not yet sure about the details of the DoJ's information requests.
"We did not even mention this case at our meeting today [July 23]," he said. "It will take us some time to gather enough information to disclose to the public."
The company said in a statement that the investigation could affect the company's share offering plan, so it decided to suspend the PPO.
Thiraphong Chansiri, TUF's president and chief executive, could not be reached for comment.
Company spokeswoman Sasinan Allmand said the DoJ recently sent a subpoena to Tri-Union requiring it to produce relevant information.
She said she could not assess how the DoJ investigation might affect TUF's business or the Bumble Bee deal.
"But we're not seeing any allegation or anything else suggesting the DoJ has seen us doing anything against the law. We can only say we have absolutely complied with the rules and regulations under US law," Mrs Sasinan said.
"We're discussing the matter with our legal consultants so that everything is clear before we make any further decision about the share financial plan for Bumble Bee."
The DoJ's investigation into the packaged seafood industry did not involve a separate review of TUF's Bumble Bee deal, she said, adding that they were different cases.
TUF products including Chicken of the Sea canned tuna are displayed at its Global Innovation Incubator, a research centre in collaboration with Mahidol University's science faculty. The Thai group has suspended its share offer plan to finance its Bumble Bee purchase amid a US investigation into that country's seafood industry. SEKSAN ROJJANAMETAKUN
TUF's purchase of Bumble Bee has been waiting since early this year for a decision from the DoJ.
The US is reviewing whether TUF's market share of tuna products in the US violates that country's antitrust laws.
Chicken of the Sea has a 15-18% market share in the US for shelf-stable tuna, while Bumble Bee controls around 28-30%.
TUF shares closed Thursday at 18.60 baht, down 1.40 baht, in trade worth 895 million baht.