The government is set to raise its stake in Thai Airways International (THAI) but will not return the ailing airline to state enterprise status, according to a cabinet source.
The proposal for the state to up its stake was approved at the mobile cabinet meeting in Chiang Mai on Friday, during which Finance Minister Pichai Chunhavajira gave an update on THAI's debt restructuring.
Before the meeting, the airline expected to raise as much as 44 billion baht from a share rights offering, a final step before the carrier exits a court-supervised debt restructuring and allows the resumption of the trading of its stock.
Thailand's flag carrier set the share price for its 9.82 billion new shares for existing shareholders at 4.48 baht, according to its exchange filing on Nov 24.
Each stockholder can purchase 4.5 new shares.
On Friday, the cabinet meeting was told of the Finance Ministry's intention to remain the airline's biggest shareholder and retain the company's status as national flag carrier without bringing it back under direct control.
However, the ministry will not have to increase its stake in the airline.
The ministry holds 47.9% of the shares in THAI. After converting debt into equity and injecting new capital, the ministry, the Vayupak Fund and Government Savings Bank (GSB) would collectively hold around 40% of THAI shares.
The government's collective share stake at that level will not return the airline to being a state enterprise.
At Friday's mobile cabinet, Mr Pichai said the Council of State, the government's legal arm, has approved the recapitalisation, as a practical and legally permissible part of the debt restructuring procedure.
However, it has been debated whether the ministry has the legal right to take part in voting to install two senior officials to the airline's debt restructuring board.
The vote was taken on Friday during THAI's creditors meeting. The ministry participated in the vote as a creditor despite protests by several other creditors who insisted it had entered into the debt-to-equity swap and effectively switched the ministry from creditor to shareholder.
However, bankruptcy protection officials explained the swap had not been completed and the ministry remains a creditor for now and entitled to vote.
The carrier's creditors agreed to convert about 53 billion baht of debt into shares after the subscription period ended earlier last month.
The airline expects to exit rehabilitation by February 2025, and resume trading on the stock exchange by May 2025.
