12 Oct 2006

UPDATE 3-Temasek may have to cut Thai Shin stake - report

(Adds finance minister comments, fresh analyst, updates shares)

By Viparat Jantraprap

BANGKOK, Oct 12 (Reuters) - Thailand is likely to order Singapore state investment firm Temasek to cut its holding in Thai conglomerate Shin Corp. to resolve a foreign ownership dispute, the Nation newspaper said on Thursday.

The paper quoted a government source as saying a top-level Singaporean official had approached interim Prime Minister Surayud Chulanont to resolve the issue "in an amicable manner".

"One likely recommendation from the Thai government is that Temasek ... should comply with the Thai foreign ownership law by quickly reducing its stake in Shin Corp, which is estimated at 96 percent, to below 49 percent," the source said.

Temasek's [TEM.UL] $3.8 billion purchase of Shin -- it took a controlling stake from the family of ousted Prime Minister Thaksin Shinawatra, and then bought the rest through a tender offer -- has been dogged by problems since it was unveiled in January.

Its tax-free nature contributed to the public anger that eventually saw Thaksin deposed in a Sept. 19 coup, and then critics alleged the deal had broken laws that prevent foreigners owning more than half of any Thai company.

A Thai Commerce Ministry probe into the complicated web of holding companies behind the deal has already found that Temasek may have broken the foreign ownership laws, and has submitted its findings to the police. Temasek declined to comment.

Newly appointed Finance Minister Pridiyathorn Devakula suggested government intervention was not imminent, saying Shin Corp's current and former owners should sort it out.

"This has nothing to do with the government. When they bought the shares, they did not ask the government," he told reporters. "The private sector should talk among themselves, talk to the private shareholders who have sold shares."


The paper also quoted an unnamed Singaporean investment banker as saying he understood Temasek chief executive Ho Ching was prepared to make compromises to resolve the holding issue.

"Temasek, from what I have heard, is willing to pay a fine or make other concessions in order to end the controversy rather than allow the issue to drag on," the paper quoted the banker as saying.

The alleged rule-breaking and various ministry and judicial investigations have weighed on Shin shares, which have dropped from above 48 baht in March to below 29 baht this week. Temasek paid 49.25 baht per share for the firm.

Shin shares rose 4.4 percent amid relief that the reported contact between Temasek and Bangkok made it less likely regulators or courts would impose punitive sanctions on Shin's businesses, analysts said.

"If the deal is resolved this way it will help ease the worries about concession cancellations that have plagued the share prices of Shin group companies, such as ITV and AIS," Therapong Vachirapong, an analyst at Phatra Securities.

Shin's main subsidiaries are Thailand's biggest mobile phone firm, Advanced Info Service (AIS) , satellite operator Shin Satellite and television broadcaster ITV .

AIS rose 7 percent, Shin Satellite 6.3 percent and ITV 2.2 percent, helping lift the overall Bangkok bourse 1 percent.

(additional reporting by Jan Dahinten in SINGAPORE)

From The Nation

S'pore urges talks to save Shin buyout

Worried Temasek ready to pay fine and reduce holding in telecom firm to 49%

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