Insider deals

26 09 2015

One of the benefits of being the largest business conglomerate in the country is that the special deals can always be done.

The largest conglomerate is the murky Crown Property Bureau. With relatively little information available (the latest effort is again by Porphant Ouyyanont, reviewed here), there are occasional reports that provide small insights into the elite-level machinations around CPB activities.

In recent days, the seemingly confusing reports on the grand failure of Sahaviriya Steel Industries in the U.K. investment taken not that long ago, have included some information about the CPB. SSI’s Board of Directors includes, apart from those of the Viriyaprapaikit family, includes a clutch of old men from state enterprises and some with strong links to the CPB.CrownProperty

SSI’s problems in the U.K. have had repercussions for several Thai banks and investors. A major impact has been for gems of the CPB, the Siam Commercial Bank and the Siam Cement Group.

Reuters reports that the Siam Commercial Bank has been forced to sell its stake in Siam Cement Group to raise “4.46 billion baht ($122.76 million) to help to cover provisions for loans to struggling steel firm.”

SCB is “one of three main creditors that lent SSI money to buy Britain’s second-largest steelmaker in early 2011. But a sharp drop in international steel prices forced SSI to halt production last week at its British plant in Redcar in northeast England.” The other two are Krung Thai Bank and Tisco Bank. The report is that the three banks are “working on restructuring around 50 billion baht ($1.4 billion) of SSI’s debt.”

The SCB has been forced to dispose of “some of its foreign investments to meet a target of raising 7-8 billion baht ($192.78 million-$220.32 million) toward SSI loan provisions of 10-11 billion baht.”

In addition, its Siam Cement sale “is included in the 7-8 billion baht target. The shortfall will come from SCB’s earnings.”

No prizes for guessing how the CPB has handled this crisis: “The Siam Cement shares were sold to the Crown Property Bureau which is already a major shareholder in Thailand’s biggest cement firm…. The Bureau also owns a 21.3 percent stake in Siam Commercial Bank.”

This set of inside deals is passed off as somehow normal: “We sold all our holding in Siam Cement to the Crown Property Bureau…. The Crown Property Bureau wanted to raise its stakes in Siam Cement. So, the shares changed hands in the same investor group.”

None of us at PPT are investors or economists so we can only wonder about these trades within groups and their lack of transparency. We can guess that the CPB is shaking a bit from the dealing that has been imposed on it.