The Ministry of Finance plans to seek cabinet approval next week for a capital injection for Thai Airways International.
Following the capital injection, the ministry’s shareholding in the airline will not exceed 50%, ensuring the company does not revert to a state enterprise, as it was in the past, said Tibordee Wattanakul, director-general of the State Enterprise Policy Office (Sepo).
The capital injection is part of the airline’s plan to allow existing shareholders to subscribe to new shares, and for creditors including the ministry to convert debt to equity, as part of its capital restructuring between Dec 6 and 12.
The ministry currently holds 47.9% of the shares in the national carrier, which is preparing to emerge from a four-year debt restructuring exercise.
After converting debt to equity and injecting new capital, the ministry, Vayupak Fund and Government Savings Bank (GSB) would collectively hold around 40% of THAI shares.
The reduced shareholding reflects expectations that THAI will be successful in raising up to 44 billion baht if all new shares on offer to existing shareholders are fully taken up.
The Vayupak Fund’s capital injection will be determined by the state-owned asset management company, while the bank’s participation depends on its board, Mr Tibordee said.
He said the capital injections would ensure the shareholding proportion does not exceed the threshold that would reclassify Thai Airways as a state enterprise, and likely would remain around 40%.
To qualify as a state enterprise, government shareholding must be at least 50%.
The capital injection by the finance ministry is to come from deposit revenue generated by the its securities management operations, estimated at no more than 20-30 billion baht, he said.
Previously the ministry informed THAI of its readiness to fully exercise its shareholder rights to convert debt into equity, amounting to around 70-80 billion baht. The debt originated from 2020.
The advantage of converting debt into equity is that after holding the shares for one year if the stock price improves, the shares can be sold.
On the other hand, full repayment of debts could take a decade.
For THAI, once the capital restructuring is complete, the company’s equity will return to positive territory.
The airline expects to exit rehabilitation by February 2025 and to resume trading on the Stock Exchange of Thailand by May.
