Cabinet approves bankruptcy restructuring for Thai Airways
The Cabinet today (May 19) approved the Transport Ministry's proposal that Thai Airways International (THAI) undergo rehabilitation under the Bankruptcy Act, said Prime Minister Prayut Chan-o-cha.
The premier declined to give details of the rehab plan, though the Cabinet has reportedly approved a plan by the Finance Ministry, which is the major shareholder in THAI, to sell 3 per cent of its shares in the carrier to the second largest shareholder, the Vayupak Fund.
The ministry currently holds 51.03 per cent of THAI shares, while the Vayupak Fund owns around 15 per cent, and the Government Savings Bank (GSB) holds around 2.1 per cent.
The Cabinet gave the green light to Thai Airways International (THAI)’s rehabilitation plan at its meeting on Tuesday (May 19), said Chakkrit Parapuntakul, second vice chairman and acting president of the airline, echoing the premier's comment earlier in the day.
He added that reforms will be implemented via the business reorganisation chapter under the auspices of the Bankruptcy Court and in line with the Bankruptcy Act.
Though THAI will undergo rehabilitation as per the bankruptcy law, the airline will not be dissolved or go into liquidation or be declared bankrupt.
Instead, the business reorganisation chapter will enable the airline to reach its objectives even more effectively in line with the law, which provides equal protection to all relevant stakeholders.
THAI, meanwhile, will be able to conduct business as usual, including passenger flights and cargo transportation.
Business will be conducted in line with the reform plan to boost operational efficiency as well as improve product and service quality.
Chakkrit said THAI is committed to do everything possible to emerge from the crisis. This is an important step for THAI to change so it becomes a stronger and more sustainable entity, he added.
All THAI tickets are still valid and passengers are advised to contact the airline via thaiairwayss.com or through its contact centre (02) 356 1111.
THAI’s credit rating downgraded ahead of bankruptcy restructuring
Tris Rating has downgraded its company rating for THAI and its rating for THAI’s senior unsecured debentures from “BBB” to “C”, while maintaining a CreditAlert with negative implications.
The downgrade on Tuesday (May 19) reflects the anticipation of a freeze on all THAI’s debt obligations under bankruptcy law, following the government’s resolution on Tuesday that the national carrier will petition for restructuring via the Bankruptcy Court.
Once the court accepts the petition, it will trigger an automatic freeze on debt obligations, meaning THAI will stop servicing all debts until an agreement is reached among all stakeholders.
When the freeze is implemented, or if there are payment defaults prior to the freeze, THAI’s rating will be downgraded to “D” or “Default”.
The CreditAlert for THAI reflects the likelihood that its ratings will be downgraded to “D”.