The government will need to raise 10 billion baht to recapitalise financially ailing Thai Airways International (THAI) to keep its shareholding in the company from dipping below 40%, according to the State Enterprise Policy Office (Sepo).
The Finance Ministry, the carrier's biggest shareholder with a 47% stake, has figured out how to raise at least this sum to maintain its shareholding in the airline.
According to Pantip Sripimol, the Sepo director-general, the ministry has decided to sell some of the shares in other state enterprises to raise the necessary funds. However, no decision has been made as to what shares in which state enterprises the ministry will offload. The final say will be made by policymakers.
As a matter of principle, the fund earmarked for recapitalisation will not come from the central budget which the government allocates to the ministry. The move comes after the Central Bankruptcy Court approved THAI's revised business reorganisation plan, setting in motion its full financial restructuring process. The debt-ridden flag carrier submitted the revised plan following a better-than-expected recovery from the most financially trying period in its history.
The airline's balance sheet has improved markedly since the removal of Covid-19 border restrictions, pushing up passenger and cargo traffic in recent months. The majority of shareholders, including the ministry, have agreed to the revised business plan which is critical for reviving the airline and pulling it out of financial rehabilitation.
The next step is for the airline to proceed with the revised plan in terms of fulfilling the targets of converting debts into capital and recapitalising. The ministry is ready to follow the processes dictated by the plan, which requires that it holds at least 40% of the shares in the carrier.
It was reported earlier that the debt-to-equity conversion and recapitalisation plan is estimated at 25 billion baht, to be completed over the next two years.
Ms Pantip said THAI has reported a positive performance since international travel has mostly resumed with the easing of the pandemic.
The company has also undertaken drastic cost-cutting measures, including retrenchment of its workforce, which has resulted in cost savings. It is estimated that once the airline has implemented the revised plan and returns to the black while managing to service its debts, the company can be re-listed in the stock market, probably at the end of 2024.
Ms Pantip said the Sepo supports the sale of the Finance Ministry's shares in non-listed businesses. Most of those shares were gained from acquiring foreclosed assets.