C&EN: TODAY'S HEADLINES - THAI FIRM'S SAGA TAKES NEW TWIST

JEAN-FRANÇOIS TREMBLAY

Creditors of Thai Petrochemical Industry are dismayed by a June 13 Central Bankruptcy Court decision not to endorse their proposed management team (C&EN, June 9, page 13).

Prachai
NEWSCOM/REUTERS/SUKREE SUKPLANG

The court elected the ministry of finance as the new administrator of TPI, Thailand’s largest chemical company. Judge Kamol Teeravetponkul ruled that the creditors’ choice, the private firm Thai Administrators, was unacceptable to the debtor and to the trade union. International Finance Corp., a private-sector arm of the World Bank to which TPI owes money, says it is “alarmed” by the decision.

Ian G. O. Melville, a chief counsel for the creditors at law firm Johnson Stokes & Master in Bangkok, says Thai laws do not require that debtors approve creditors’ decisions once a company has failed. He says TPI’s 150 or so creditors could appeal the court’s decision in the Supreme Court, but they have not yet decided to do so. A final hearing at the bankruptcy court is scheduled for July 7.

The problematic debtor is company founder Prachai Leophairatana. The University of California, Berkeley, electrical engineering graduate was dismissed from management in 2001 after a debt-for-equity swap gave 75% of the company’s shares to its creditors. They are still owed about $2.7 billion, Melville says, down from $3.7 billion before the swap. Prachai has been temporarily running TPI for the past few weeks following another court ruling that ousted the managers who ousted him.

A few weeks ago, the finance ministry proposed running TPI through a 15-member committee that it would chair. Half of the members would be creditors’ representatives, and half would be Prachai appointees. “You can’t run a petrochemical company this way,” Melville says.