Shares of JKN Global Group plunged by nearly 30% to a floor of 0.77 baht on Thursday after the owner of the Miss Universe Organization announced it had filed for business rehabilitation with the Central Bankruptcy Court.
In a statement to the Stock Exchange of Thailand, founder and chief executive Jakkaphong “Anne” Jakrajutatip said JKN had proposed itself as the planner of the rehabilitation.
The media company has petitioned to adjust interest rates on existing debt and extend its debt repayment period.
JKN, which bought the Miss Universe Organization for $20 million in October last year, has delayed some payments for its bonds, citing global and domestic economic challenges. The company is seeking the bankruptcy proceeding even after some investors in September agreed to extend the payment of due bonds.
Ms Jakkaphong said earlier in September that she had sold nearly 100 million shares through “forced selling” to comply with margin accounting rules after the company’s share price dropped by more than 50% in one week.
Preliminary guidelines for the rehabilitation include business and financial restructuring in line with the company’s current financial assumptions and economic conditions to solve working capital problems and increase its financial liquidity, the statement said.
Under the plan, JKN would extend the period of debt repayment and waive interest payments to generate adequate income from operations to repay all of its creditors and continue business operations, said Ms Jakkaphong.
New investors sought
“JKN will receive financial support from new investors or financial institutions to provide working capital. Non-productive assets would be sold to generate income to repay debts,” she said.
The rehabilitation, she added, would include strategies “to manage the liquidity of the company, improve the internal organisation and increase business efficiency”.
The rehabilitation is expected to solve the company’s liquidity problem through a legal mechanism and provide fair protection for all stakeholders while JKN continues its operations, said Ms Jakkaphong.
The hope is the plan enables the company to create profits in the future, she said.
As of June 30, JKN had total liabilities of 7.4 billion baht, almost half of which were owed to bond investors, according to the filing with the SET.
Kitpon Praipaisarnkit, vice-president of UOB Kay Hian Securities (Thailand), said JKN is seeking court-supervised business rehabilitation by appointing itself as a planner in order to protect the company from a liquidity squeeze.
Under the process, JKN can stop repaying debts and creditors cannot demand repayment, he said.
The rehabilitation plan requires the court’s approval, but creditors can reject the plan and ask the court to oversee JKN’s rehabilitation so the creditors can decide whether to sell the company’s assets or spin off some operations, said Mr Kitpon.
Ms Jakkaphong said the company had tried its best to negotiate with creditors and does not intend to avoid debt repayments.
“The company faces a liquidity shortage and it could create a domino effect for all the concerned parties,” she said.
Cash flow problems
Mr Kitpon advised investors to avoid JKN, citing the company’s massive investment in the Miss Universe Organization.
“At the time of the purchase, JKN’s cash flow was not good when it bought the MUO, which was plagued with losses. Since then, we haven’t seen much positive development from the investment,” Mr Kitpon told the Thai newspaper Krungthep Turakij.
“For investors who already hold shares of JKN, they need to monitor the progress of its business rehabilitation proposal and the guidelines. The rehabilitation could be a long-term pain for shareholders because the current debt is high, while both its TV and content businesses need further investments.”
Ms Jakkaphong, a celebrity media tycoon and transgender rights advocate, made global headlines when she announced her company’s purchase of the Miss Universe Organization last year.
At the time she promised to transform the competition, opening it to married as well as transgender women. “This will be the world’s first beauty contest with real gender equality and inclusion,” she said.
The 2023 Miss Universe competition will be held in El Salvador on Nov 18.
The contest run by the Miss Universe Organization, which was co-owned by Donald Trump between 1996 and 2002, has been running since 1952.