Shares of JKN Global Group Plc (JKN) plunged on Thursday after the owner of the Miss Universe Organization said it would miss a payment on 609 million baht worth of debentures, the first of seven tranches of debt worth 3.36 billion baht.
Chief executive officer Jakkaphong “Anne” Jakrajutatip told the Stock Exchange of Thailand that the company would pay 156.6 million baht — 146.62 million in principal and 9.98 million in interest — on Friday.
The payment would account for 26% of the total, leaving an outstanding balance of 443.4 million baht on the debenture issue JKN239A.
News of the content distribution and media buying company’s liquidity trouble sent JKN shares down sharply. They closed at 1.70 baht, down by 68 satang or 28.6% from the day before, in turnover worth 340.6 million baht.
According to Ms Jakkaphong, JKN plans to meet with debenture holders on Sept 29 to seek their approval for a repayment delay.
If they agree, the overdue payment would not be considered a default as earlier contracted, and debenture holders would not call for immediate repayment, she said.
“The company firmly believes in its capacity to uphold the repayment plan pertaining to principal and interest obligations with various sources of funding being considered,” she said.
However, negotiations with various partners have so far failed to reach outcomes in line with company’s expectations, she said.
“In this regard, the company confirms and reiterates its commitment, to complete repayment of both principal and interest attached to the JKN239A debenture, alongside any other debentures issued by the company,” she added.
According to the Thai Bond Market Association (ThaiBMA), JKN has six more tranches of debentures on which interest payments are due this year: on Sept 11, Oct 20, Nov 10, 13, 15 and 24.
The other six tranches are worth 300 million, 578.6 million, 400 million, 800 million, 525 million and 156.6 million baht with maturity dates in 2024 and 2025.
Out of the seven series, Asset Plus Securities is the bond representative for while Daol Securities is the representative of the five other tranches.
The JKN case is the third instance this year of a debt default or potential default, following trouble at All Inspire Development (ALL) and Stark Corporation. The latter has become a criminal case.
In the case of JKN, the company has insisted that it would only ask creditors to agree to a delay in payment on one tranche of debt, noted Mongkol Puangpetra, executive vice-president for strategy research at Daol Securities.
“Current bond market conditions are very sensitive, especially for the issuance of high-yield and unrated bonds,” Mr Mongkol acknowledged.
For high-yield and unrated bonds, issuers face higher funding costs because of current high interest rates. They have to find more collateral assets to back the bonds to ensure they appeal to investors, he added.
Delaying repayments would have inevitable impacts on investment sentiment in the bond market as investors would grow more cautious, said Mr Mongkol, adding that they must closely follow up on how JKN deals with its problems.
JKN last year reached a deal to acquire the Miss Universe beauty pageant business, which was co-owned by Donald Trump between 1996 and 2002, and secure a licence agreement for the show for an investment of US$20 million.
Forbes Thailand has named Ms Jakkaphong the most powerful trans woman in the world.
The first Miss Universe pageant held under the stewardship of JKN is scheduled to take place in El Salvador on Nov 18.