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Thai Airways Capital Restructuring Set to Begin

Thai Airways Capital Restructuring Set to Begin

Thai Airways International has submitted a fair value assessment to the Stock Exchange of Thailand in preparation for its upcoming capital restructuring, which will involve a debt-to-equity conversion and the issuance of new shares. The restructuring will include issuing a total of 31,499,688,248 new shares, leading to significant reductions in the stakes of many existing shareholders, while enabling the airline to acquire more aircraft and expand its operations.

According to the 72-page assessment prepared by Capital Advantage Co., Ltd and filed by Thai on October 11, 2024, the airline plans to issue 14,862,369,633 new shares through a mandatory debt-to-equity conversion scheme, as outlined in its rehabilitation plan and agreed upon by the necessary creditors. Additionally, 4,911,236,813 shares will be issued via a voluntary debt-to-equity scheme, 1,903,608,176 shares for converting accrued interest into equity, and 9,822,473,626 shares will be offered to existing shareholders, employees, and through private placements. Each new share will have a par value of THB 10 (USD 0.30).

In late 2022, as part of rehabilitation processes, Thai registered an increase in capital from THB 21,827,719,170 (USD 654,622,096) to THB 336,824,601,650 (USD 10,101,505,577). The debt-to-equity conversion and new share issuance form the final steps of these capital increase plans.

As a result of the mandatory conversion, there will be significant changes to Thai Airways’ shareholder register. Creditors involved in the rehabilitation plan who do not currently own shares will collectively acquire 7,759,407,745 shares, representing a 45.67% stake in the airline. A total of 36 creditor groups have submitted claims amounting to USD 12.3 billion, including USD 12.12 billion in principal and the rest in interest and expenses.

Currently, the top shareholder, the Ministry of Finance, holds 1,044,737,191 shares, constituting a 47.86% stake. Following the mandatory conversion and capital raising, the ministry will own 6,084,600,968 shares, but its stake will decrease to 35.81%. The second largest individual shareholder, the Vayupak Fund, owns 165,163,864 shares or 7.57% of Thai Airways, which will diminish to 0.97% after the conversion and capital raising.

Bangkok Bank PCL, which currently holds 9,372,044 shares (0.43% stake), will participate in the capital raising process and will increase its holdings to 1,156,450,503 shares, equating to a 6.81% stake in the airline. Various state-owned enterprises, including the Government Savings Bank, the Islamic Bank of Thailand, the Export–Import Bank of Thailand, and the National Telecom PCL, currently own a combined 46,409,885 shares (2.13%). After the mandatory conversion and capital raising, these entities will collectively hold 907,741,015 shares, or 5.34% of Thai Airways. Smaller shareholders own the remaining 917,088,933 shares (42.01% stake), which will be reduced to 5.40% following the conversion.

The upcoming capital restructuring is part of the final stages of Thai Airways’ rehabilitation plan. To successfully exit this process, the airline must also meet three additional conditions: not defaulting on any agreed payments for five years post-rehabilitation, achieving pre-EBITDA and post-debt repayment earnings of at least THB 20 billion (USD 600 million) for two consecutive years, and appointing new directors if shareholder makeup changes.

Thai Airways CEO Chai Eamsiri has indicated that the airline expects to meet these conditions and aims to conclude its rehabilitation procedures by the second quarter of 2025, subsequently returning to public trading shortly after. The airline last traded publicly on May 17, 2021.

The capital restructuring and completion of the rehabilitation process will enable Thai Airways to grow and take advantage of the strong passenger traffic flowing in and out of Thailand. Currently operating 78 aircraft, the airline plans to expand its fleet to 150 by October 31, 2031 (FY2031). The fair value assessment outlines a projected fleet growth to 88 aircraft by the end of FY2025, reaching 150 aircraft by FY2032. Before the pandemic, Thai Airways operated 103 aircraft, but the fleet diminished to 77 due to decommissioning during the pandemic.

The airline expects to receive two A330-300s by the end of 2024. In 2025, it anticipates deliveries of 13 new aircraft, which will include five B787-9s, six B777-300ERs, one A330-300, and one A321-200

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