Eastern Wire ‘partly clarifies’ its deals
Eastern Wire Plc has partly clarified its transactions with JJ Land Development and Union Gas and Chemicals, but the company will be carefully monitored, the Stock Exchange of Thailand said yesterday.
“We’re keeping a close eye on the company to see if it spends its capital-increase proceeds according to what it told shareholders. The shareholders themselves should also be careful,” said Suthichai Chitvanich, an executive vice-president of the SET.
Eastern Wire’s price rose to the ceiling level of Bt19.20 yesterday, a 29.7-per-cent increase from the previous close, even though it was being examined by the SET following transactions with the two firms and irregular price movements.
“Pressing it for more disclosure is the only thing we can do. But it is the investors who will have to weigh if the information is reliable,” Suthichai said.
After it was placed in the rehabilitation sector, Eastern Wire resumed trading on September 1, 2004 at the price of Bt20. On October 29, the price shot up to Bt84. But the SET did not find any trading irregularities despite the rapid price increase.
Suthichai said finding irregularities would require evidence of price manipulation, inaccurate disclosure or use of inside information. He said the SET would seek an immediate explanation if it finds anything suspicious.
Eastern Wire attracted media attention following its Bt1.2-billion loan to JJ Land, whose assets stood at only Bt1.8 billion at the end of 2004, mainly from the Laksi Plaza and Sinthanee buildings.
Eastern Wire also paid Bt80 million to Union Gas for the supply of raw materials.
Eastern Wire informed the SET that the short-term loan was approved by its executive committee on January 28, because JJ Land was considered financially reliable with net assets after liabilities of Bt500.89 million, as of November 30, 2004.
The company’s revenue also reached Bt67.95 million, with after-tax and after-interest profit of Bt21.22 million. It was also waiting to sell assets to property funds, a move that would raise sufficient proceeds for the loan repayment.
From its investigation, the SET found that JJ Land was established on February 20, 2003.
At the end of the year, its shareholders’ equity reached Bt389.92 million on the back of Bt400 million paid-up capital and Bt10.08 million net loss.
As regards the raw material supply contract to Union Gas, Eastern Wire said the company had experience in supplying steel and other construction raw materials. After failing to honour its promise, Union Gas repaid Eastern Wire Bt80 million plus Bt5 million in compensation.
Eastern Wire was also questioned over the two lists of Union Gas shareholders and their shareholdings, which it submitted to the SET.
The first list, submitted by fax at 1.51pm on June 8, showed Warawut Lapwisuthisin as the major shareholder with 40 per cent, Suphaporn Lapwisuthisin with 20 per cent, Suchanya Lapwisuthisin with 10 per cent and Ratana Sathienvaree with 10 per cent.
The second list, submitted by e-mail at 8.38pm on the same day, showed Komkrit Luechanya as the major shareholder with 97 per cent and Ratana Sathienvaree with 3 per cent.
Eastern Wire explained that the first set was sent from Union Gas. Spotting the error, it cross-checked with Union Gas and later submitted the new list.
Published on June 15, 2005