Thai Film Industries Plc (TFI) will sell a 3.04-per-cent stake in Thai Copper Industries Plc (TCI) as well as a million warrants of TCI to Marubeni Corp for nearly Bt190 million.

TFI, in which Thai Rak Thai Party executive Prayudh Mahagitsiri is the major shareholder, announced yesterday that it would sell 188.85 million shares at Bt10 each to the Japanese firm.

TFI stock was last quoted at Bt1.12 before it was suspended on Monday.

The 944,250 warrants representing 2.35 per cent of TCI's total outstanding warrants will be sold to Marubeni at 1 satang each, the company said in a filing with the Stock Exchange of Thailand (SET).

Each warrant is convertible into a common share at a price of 1 satang.

TFI's shareholding in TCI excluding warrants will be reduced from 27.47 per cent now to 24.43 per cent.

Marubeni's holding in TFI will be 2.99 per cent if its warrants are fully converted.

Warrant-holders have the right to convert the units into common shares within three months after TCI's plant has been in commercial operation for a minimum of one year, and the new shares reserved for warrant exercise are given the nod by the SET as listed securities.The warrants expire four years from December 4, 2002.

The transaction will be completed today.

TCI smelts copper concentrate and refines it to 99.99-per-cent pure copper cathode in the form of wire rods and copper cathode sheets, mainly as substitutes for imported copper cathode.

The company said the Bt10 price to Marubeni, which is higher than the book value of Bt8.62 per share, was the same price TFI paid to buy the shares.

It said the sale of a portion of TCI shares held by TFI would improve the company's liquidity, since TFI had increased capacity from 77,000 tonnes per year in 2004 to 107,000 tonnes per year in 2005.

"So, TFI needs more working capital to support additional sales, due to the capacity expansion," the company said.

"If TFI cannot sell the TCI shares to receive cash for working capital, TFI will need to borrow from banks or financial institutions, which will create additional interest expenses. And the approval process by banks and financial institutions takes time and cannot fulfil TFI's requirement to expand our business in time."

TFI said the securities sale would give it an immediate injection of capital and reduce its dependence on credit facilities for expansion.

But in the future, income from dividends to be received from TCI once it turns profitable, as well as any capital gains if TCI were to go public, would be reduced.

TCI posted net losses of Bt1.22 billion and Bt1.2 billion in 2004 and 2005, respectively.