The SET's request came after the company announced it would raise funds by issuing 350 million capital-increase shares, of which 200 million shares will be offered to specific investors through private placement and the remainder will be reserved for warrant conversion.

The company's board also approved a plan to allocate 150 million warrant units to directors and employees free of charge, and with an exercise price of Bt1.

Moreover, 78.4 per cent of the warrants will be allocated to the company's chief executive officer, Jrarat Pingclasai.

"For what reasons did the board of directors decide to sell the shares through a private-placement offering instead of a rights offering to existing shareholders? Moreover, in cases where the private-placement allocation is to a connected person, Dragon One has to comply with SET regulations regarding connected transactions," the bourse said.

The SET wants Dragon One to explain the advantages the company expects to get from the recapitalisation, apart from fund raising, and what are the conditions or restrictions of the private placement, including the silent period during which the shares must not be sold.

Details and the time frame for using the funds to be raised from the private placement and ESOP warrants are required, the SET said. The clarification must be sent to the stock exchange by Friday.

Shortly after the SET made its announcement, Jrarat told reporters that his company planned to sell the newly issued shares through private placement as these specific investors have business insight and can be beneficial to the company's business in the long run.

"Retail investors might not understand Dragon One's business structure because the holding company's revenue comes from the investment itself, not the operation," he said.

In addition, selling shares through private placement would allow the company to achieve its aim of mobilising funds.

The offering price has yet to be set because the company will choose to sell to those who offer the best price, he said.

The capital-increase shares to be sold to specific investors will not come under the silent period, he said, adding that this means those who buy the shares can sell them immediately after the SET accepts the shares for listing on the stock market.

He said that shares held by himself and other shareholders did not have any silent period, and he has sold the shares gradually as the stock price increased.

According to SET records, Jrarat once had 67.18 per cent in Dragon One after it bought 100 million shares from shareholders of Diana Department Store Plc - recently renamed as Dragon One - at Bt0.408 each, and 97 million capital-increase shares at Bt1 each. However, Jrarat's shareholding was 30.87 per cent as of August 24, after the shares were sold back through the stock market.

Siriporn Chanjindamanee

The Nation