Shares of Italian-Thai Development (ITD) plunged by more than 12% on Monday as the contractor said it is planning to postpone for two years the payment of its five tranches of debentures worth a combined 14.5 billion baht.
The stock dropped to a low of 0.81 baht apiece as the Stock Exchange of Thailand (SET) opened for trading but edged up to finish at 0.87 baht by midday, down 10.3%, on worries about a possible debenture payment default. ITD was closed at 0.85 baht on Monday, down 12.37%, in trade worth 79 million baht.
In a filing to the SET, ITD said it will convene a debenture holders' meeting on Jan 17 via an e-meeting for multiple tranches of debentures with separate quorums and vote counts for each tranche.
The meeting will consider and approve an extension to the maturity dates of the company's debentures for an additional two years and an increase in the interest rates of the debentures by 0.25% per annum for one year from the day following the original maturity dates.
The interest rates will be increased by 0.50% per annum from the day after the day the debentures have matured for one year to the new extended maturity dates.
All increased interest will be paid once on the new maturity dates, it added.
ITD would also seek approval from bondholders for waiving the debt-to-equity (D/E) ratio, which was stipulated in the terms of rights, effective from the end of last year until the end of 2025 and allow the company to "enter any negotiations or contracts with creditors for debt restructuring without being considered as a cause of default under the terms of rights", the statement noted.
Of the total five tranches, three are due this year, starting with 2 billion baht scheduled for repayment on Feb 15.
The other two tranches are worth 2.45 billion and 1.2 billion baht, both due to be paid on Dec 4.
The fourth tranche of 6 billion baht is due for payment on April 29, 2025 and the fifth tranche of 2.78 billion baht is set to be redeemed on June 2, 2026.
Brokers, including Phillip Securities and Yuanta Securities, recommend investors avoid investing in ITD stocks at the moment, although the overall construction sector is poised to rebound after parliament endorsed the 2024 fiscal budget to drive public investment.
"Asking the bondholders to postpone the payment clearly indicates that ITD's shortage of liquidity is getting worse," Phillip Securities said in a research note.
In mid-December last year, Tris Rating downgraded its rating on ITD to BB+ from BBB- and downgraded the ratings on ITD's existing senior unsecured debentures to BB from BBB-, noting that the outlook "remains negative".
"The rating downgrades reflect our concerns over the company's heightened liquidity risk, given its relatively weak operating performance and high financial leverage," the credit rating agency said in a statement issued on Dec 15.
Tris noted that unfavourable conditions in the bond market are making it more difficult for several companies, including ITD, to rollover its maturing debenture obligations.
ITD's plans to divest non-core assets, such as the cement plant and its stake in a potash mine, are underway. However, the timing remains uncertain.
The "negative" outlook implies that the ratings for ITD and its outstanding debentures could be downgraded further over the next 12-18 months if its liquidity does not improve, it added.