Bondholders of Stark Corporation Public Company Limited called for immediate payment of about US$200 million after a special audit revealed accounting irregularities, the latest trouble for the Thai electrical components maker that has defaulted on debt and seen its shares plummet to near-zero.
Holders of three series of bonds maturing between 2024 and 2025 totalling 6.95 billion baht (US$200 million) submitted payment demand letters to Stark on Tuesday. The company has until July 20 to pay the principal and interest, Kasikornbank Pcl and Asia Plus Securities Co said in separate statements.
"It's uncertain how much bondholders and other creditors of Stark can reclaim as the company doesn't have many remaining assets," said Thai Bond Market Association president Somjin Sornpaisarn.
The demand for immediate payment follows Stark’s default on interest payments of 18.1 million baht on two other notes that were due on June 2, the Thai Bond Market Association said on its website.
Bangkok-listed Stark reported a combined loss of 12.6 billion baht for the last two years, following the discovery of various irregularities in its books. With the company’s shareholder equity turning a negative 4.4 billion baht at the end of last year and mounting losses, there are doubts "about the Group’s going concern," it said last week.
Stark’s troubles spilled into the broader Thai bond market as some issuers with below investment-grade ratings or without assessed creditability missed sales targets in recent weeks.
The accounting scandal and defaults have also triggered a probe by Thailand’s Securities and Exchange Commission (SEC) and other agencies into Stark’s operations. A special audit by PricewaterhouseCoopers, which pointed to various irregularities in the company’s books, may lead to further financial statement revisions, according to Stark.
The company also faces a claim for €608 million after it pulled out of an agreement to buy a German maker of automotive cable solutions, citing the fallout of Russia’s war in Ukraine.
On Tuesday, Finance Minister Arkhom Termpittayapaisith urged the SEC to take steps to protect the interests of Stark investors and rebuild confidence in the market.
"The actions of bond representatives should be one positive move by helping speed up the legal process to enforce the debt repayment," said the bond market association's Somjin. "Delays in the legal process in past debt defaults really hurt investors and creditors."
Stark shares have lost 99% of their value since trading resumed on June 1, and the market regulator has warned investors to be cautious in assessing the company’s financial statements before making investment decisions.