Italian-Thai Development Pcl confirmed that it is in talks with banks for new loans to tide over the liquidity crisis. — Bloomberg
BANGKOK: A cash crunch at Thailand’s largest construction company is fuelling concern among investors, regulators and rating agencies already unnerved by a series of local corporate scandals and debt defaults.
Italian-Thai Development Pcl confirmed on Wednesday reports that it is in talks with banks for new loans to tide over the liquidity crisis that led to delayed payments to some workers and contractors.
Trading of shares in Italian-Thai, which had total liabilities of 108 billion baht including bonds, loans and trade credit as of Sept 30, was suspended this month after the contractor missed the deadline for submitting its full-year 2023 financial statement.
The contractor posted a cumulative loss of about six billion baht (US$168.16mil) from 2020 to 2022 as it took on engineering projects in places including India, Taiwan and Myanmar – where imposition of military rule led to delays, shutdowns and write-downs.
The financial squeeze has forced the company to explore the sale of a mining unit and extend the maturity period of about 15 billion baht worth of bonds by two years.
Italian-Thai shares have halved since a 2023 high of 1.69 baht, giving the firm a market value of 4.5 billion baht.
“The market is nervous about the banks that are owed and how much loan exposure they have,” said Narongsak Plodmechai, chief executive officer of SCB Asset Management Co, which oversees about US$36bil of assets.
“It just adds more noise to the already weak market sentiment.”
Italian-Thai had total revenue of 47 billion baht in the first nine months of 2023. It swung to a loss of 45 million baht in the July-September quarter. The company has requested the stock exchange to extend the financial statement filing deadline until March 29, citing ongoing information processing and reviews by its auditor.
“We have been in close discussion with related parties about Italian-Thai,” Pornanong Budsaratragoon, secretary-general of Thailand’s Securities and Exchange Commission (SEC), said on March 11. “The impact will probably be much greater than other cases if the company really has financial trouble given its size.”
The SEC is stepping up supervision of risky bond issuers to boost payment safeguards and investor confidence. — Bloomberg
