Published on July 12, 2007
Allegations of wrongdoing filed against Tongkah Harbour (THL) subsidiary Tungkum (TKL) by the Primary Industries and Mines Department will create a risk for THL, which is expected to post a loss as high as Bt40 million this year, say analysts.
However, THL said it would petition the Industry Ministry to mediate on the issue.
Analysts said THL might risk returning to rehabilitation after having recovered and returned to the normal trading board early this year.
THL share trading was halted yesterday by the Stock Exchange of Thailand (SET) and then allowed to resume after the company submitted information about the allegations. The stock yesterday closed down 3.67 per cent at Bt2.10.
The department earlier alleged that TKL had intentionally exported gold-ore bullion containing about 71-per-cent gold and some silver content and weighing 105.5153 kilograms from its mine/metallurgical area to Hong Kong without filing a request-for-transport permit. That was deemed to be a violation of Section 103 of the Minerals Act of 1967.
Consequently, the department on Monday imposed a one-time fine of Bt52.83 million, equal to the gold price on the relevant shipment day.
DBS Vickers Securities (Thailand) said the fine would have a negative impact on THL, because the company was likely to post a loss as high as Bt40 million this year rather than a net profit of Bt14 million as earlier forecast. Last year, the company recorded a net loss of Bt9 million, as reported by its financial statement, which has still not been revised as ordered by the Securities and Exchange Commission.
"Although the company has asked the government to drop its claims, that would be difficult. The company has violated the law," one DBS Vickers analyst said.
THL yesterday submitted a statement to the SET saying the reason cited by the department for the fine, that of not having a proper permit, was not valid, because the requirement was superseded by another Act in place at the time.
"The company therefore respectfully suggests that claims made against it by the government be dropped," the company said in its letter to be submitted to the Industry Ministry.
THL director Udom Chirapanaphorn yesterday said his company would ask the Industry Ministry to mediate on the issue. If mediation fails, the company will set up a dispute-settlement panel to settle the issue within 45 days. And if that fails, the company will petition the Administrative Court. He believes his company will not return to the rehabilitation group.
A Siam City Securities analyst said if the fine by the department must be booked as an expense in last year's financial statement, THL might have to return to rehabilitation, but if it were booked in this year's statement, then the recommendation of THL would be downgraded.
The securities firm currently recommends "hold" for THL shares, with a target price of Bt2.20 apiece.