Once bitten, forever shy

Two years ago, there was another "blast" caused by a cooking-gas distributor. Picnic Corporation delayed and finally defaulted on its bills of exchange, badly burning several asset-management firms who had invested in them.

Coincidentally, the offices of almost all the asset-management firms involved are on Sathorn Road.

Travelling along the road - the centre of the business district at the heart of the City of Angels - Aberdeen Asset Management, UOB Asset Management (Thai), Finansa, Tisco Asset Management and Krung Thai Asset Management are to be found.

Ayudhya JF Asset Management (AJF), which was renamed Ayudhya Fund Management after the Bank of Ayudhya became the sole shareholder last year, was also among the victims. Its office is a bit further away, on Ploenchit Road.

Over two years have passed since Picnic's bills of exchange turned to dust. Legal processes have been initiated, but so far the debts remain unpaid.

The six firms fell into the trap when the due bills of exchange turned into a long nightmare. AJF, UOB and Tisco have managed to get a repayment from Picnic, leaving the remaining three Alices waiting in Wonderland.

The damage didn't stop there. The smell from one bad fish caused a hiccup in B/E issuance, on both supply and demand sides.

On the supply side, after regulators ordered the every B/E be rated, not many corporate companies wanted the added expense of getting the credit rating and turned to bank loans and other fund-raising options.

On the demand side, many asset management firms cut out B/Es as an investment tool in their funds. There seems to be no demand even when a good company wants to issue B/Es.

Ironically, Picnic's securities are still trading in the stock market. Its executives have been shuffled over and over again.

This classic case confirms that at the end of the day, those who don't have enough power to speak out invariably get the worst possible outcome.

For the mutual-fund industry, this haunting ghost is a very sensitive issue. Not many in the industry want to talk about it. This is not about rubbing salt into wounds but about when this ambiguous, troublesome rule violation will end.

Do the parties involved want to see more blasts?

Piyarat@nationgroup.com