Police Lt-Colonel Pongthep Lapvisuthisin, chairman of embattled bottled-gas manufacturer Picnic Corp Plc, assured a meeting of the company's shareholders yesterday that the Lapvisuthisin family - and its allies - would subscribe to Picnic's latest capital-increase share issue, even stock left over from the rights offering.

He said his family would subscribe to the full extent of its rights. In addition, the family and its allies, which now own a combined 37 per cent of Picnic, will subscribe to the leftover shares from the upcoming rights offering.

He declined to name his family's "allies".

According to Stock Exchange of Thailand data, the shareholding of Supaporn and Theeratchanon Lapvisuthisin amounted to a 6.77-per-cent stake as at February 14 this year.

Picnic was founded by the Lapvisuthisin family. However, its holding has declined since the Securities and Exchange Commission ordered the company to revise overstated financial statements for 2004 and the first half of 2005.

Financially ailing Picnic yesterday succeeded in holding a meeting of its shareholders, at which the hefty recapitalisation plan was at the top of the agenda. An earlier attempt to hold an extraordinary meeting of shareholders failed because it did not make a quorum.

Yesterday's meeting attracted 67 shareholders with 347 million shares. It endorsed Picnic's capital-increase plan to issue 1.48 billion shares to existing shareholders at a ratio of one new share for every two held, at a price of Bt1 each.

The proceeds will be used to service Picnic's debts, particularly its defaulted bills of exchange.

In response to the news, Picnic's stock yesterday rose 18.5 per cent to close at Bt0.77.

The company is being sued by three asset-management companies who hold Picnic's bills of exchange with a combined value of Bt226 million. Picnic defaulted on their repayment late last year.

Another asset-management company has agreed to withhold legal action against the company until June this year on the condition that its pays interest on defaulted bills of exchange worth Bt283.79 million.

"I believe that retail investors will not exercise their full rights [to subscribe to the capital-increase share issue] because the offering price is above the current market price," Pongthep said. "However, the company has prepared a solution by offering the leftover shares to shareholders to exercise over-rights.

"In the case of leftover shares remaining, the shares will be sold to specific investors through private placement. A number of investors is negotiating with the company."

If there are shares left over from the private placement, Picnic will offer them to the company's creditors in a debt-to-equity swap, Pongthep said.

Picnic managing director Nattachai Aramrasmewanich forecast that proceeds from the share allotment would be obtained in May and the company's registered capital would be raised from Bt2.98 billion to Bt4.45 billion.

He explained that the subscription ratio of one new share for every two held shares at a price of Bt1 each would result in a lower dilution effect than if a ratio of one new share for ever one held share were used at Bt0.50 each.

Regarding its creditors who hold defaulted bills of exchange, Nattachai said three asset-management companies had agreed to consider the company's proposal for a debt-to-equity swap, but they are waiting to see the outcome of the rights offering before making decisions.

Siriwat Voravetvuthikul, a well-known stock investor and a Picnic investor, predicted that retail investors would turn a blind eye to the company's recapitalisation plan, despite having approved it.

"The company's minor investors supported the recapitalisation plan with the aim of reducing its debt-to-equity ratio and to increase its operating flexibility," he said. 

Siriporn Chanjindamanee

The Nation