Published on October 13, 2007
King Power International has missed its first-year revenue target due to controversies over commercial and duty-free shop agreements, which led foreign financial institutions to cut credit lines by Bt5 billion-Bt6 billion, said a company executive.
King Power International Group, operator of duty-free shops at Suvarnabhumi Airport and a downtown complex, reported revenue of Bt18 billion, Bt1 billion short of the target, for the first-year operation from September last year.
Group deputy chairman Chulchit Bunyaketu cited the controversies over the concessions between King Power Group and Airports of Thailand (AOT) as the main reason for the revenue drop.
"This troubles the company's business outlook," he said, noting that the controversies have hurt the confidence of partners doing business with the group.
As evidence, several overseas banks have cut credit lines worth Bt5 billion-Bt6 billion. Mean-while, local financial partners including Thai Military Bank and Siam Commercial Bank have also shown concern about its business outlook, he said.
He said that foreign banks have lost confidence in the company so they decided to make the credit cuts. Therefore, the group was now resorting to its own cash flow to build a new hotel and additional expansion projects such as a theatre.
Chulchit said that many luxury products that had already invested in shops or outlets at the airport and the complex were also upset by the legal wrangling.
Watchmaker Rolex decided to relocate its boutique from Suvarnabhumi Airport to the downtown complex.
Chulchit said King Power would not remove shops from Suvarnabhumi Airport within 60 days as instructed by AOT's board of directors on Wednesday.
King Power has filed a civil lawsuit to the Civil Court that provides a business injunction until the case is solved. The group seeks damages of Bt68 billion for the nullification of its concessions. It wants to continue operating commercial areas itself rather than have them thrown open to bidding but is expected to hand AOT more benefits.
However, AOT rebutted that the case should proceed to the Administrative Court. AOT's board wants to open bidding for the operation of the duty-free area to other private concerns to ensure market competition. It also wants shopkeepers in the commercial areas to sign contracts with it directly.
Chulchit said there should be a committee to consider where the case should be prosecuted. He said King Power would wait until the committee comes up with a resolution.
"In the next 60 days, if anybody removes King Power's shops, we need to seek court protection," he said.