Ch Karnchang's board of directors agreed to set aside full provisions of Bt2.5 billion for failing to receive compensation from the Expressway and Rapid Transit Authority of Thailand (ETA) for the increased cost of constructing the Bang Na Expressway.

The figure is its share of the Bt6.2 billion that Ch Karnchang and other partners of Joint Venture BBCD, the expressway contractor, had claimed from ETA.

The Supreme Court last week ruled that ETA was not obligated to pay the claim on grounds that the ETA governor was not authorised to sign the construction contract.

Ch Karnchang's partners are Bilfinger & Berger Bauaktiengesellschaft and Dyckerhoff & Widmann AG, with Ch Karnchang holding 35 per cent of the consortium.

In yesterday's statement to the stock exchange, Ch Karnchang said the additional reserves would reduce its 2006 shareholders' equity by the same amount - Bt2.5 billion.

Ch Karnchang's consolidated financial statements would show the entire Bt2.52 billion provisioning for doubtful accounts, while its own financial statement would show Bt2.51 billion.

The company said the joint-venture partners mutually resolved to waive interest on loans provided by all partners. However, the right to charge interest would remain unaffected should such compensation for the increased costs be received from the employer (ETA), failing which no interest would be charged.

The company's consolidated financial statements would show a reversal of Bt442.84 million from accrued interest payable and Bt13.36 million from accrued interest receivable, while its own financial statements would show a reversal of Bt20.56 million from accrued interest receivable.

The firm said the changes would not cause its net debt-to-equity ratio under the covenants of its debentures to exceed 2.5 times.

"However, management is currently reviewing the details of the judgement by the Supreme Court and is of the initial view that the judgement refusing to enforce the arbitral award, reasoning that the contract

between ETA and Joint Venture BBCD has no binding effect, does not affect Joint Venture BBCD's legal right to claim for the increased costs of Bt6.04 billion, including interest at the rate of 7.5 per cent per annum," Anukool Tuntimas, Ch Karnchang's executive vice president, said in the statement.