Bangkok Apartment | Bangkok Serviced Apartments | Bangkok Condos

N-PARK FIGHTS FOR ITS LIFE

Property firm struggles with debt cases revived after rejection of rehabilitation plan. Sermsin Samalapa is blunt about his company's fate - Natural Park is a patient in intensive care, teetering on the edge of survival. The six-star Amanresort Bangkok, planned for the site of the 119-year-old Customs House on the Chao Phraya River, is two years behind schedule. "Our future and fate depend only on the [court] judgment. Win, we survive. Lose, we die," says the chief executive of the listed property company. One of many casualties of the 1997 financial crisis, N-Park emerged from rehabilitation in 2004 but was sent back to square one when the Supreme Court in January 2007 dismissed its rehabilitation plan. The ruling effectively restored N-Park's debtor status as well as the debts it had faced. Creditors subsequently crowded to sue the company, resulting in many new cases. Its share price slipped from 1.50 baht to 1.20 and finally to a perilous one satang today, says Mr Sermsin, who has personally lost around 100 million baht on his 4% holding from the share freefall. N-Park recorded a net loss last year of 1.8 billion baht, though that was an improvement from a loss of 3.46 billion the year before. In the first case following the Supreme Court ruling, the Southern Bangkok Civil Court on July 6, 2007 ordered N-Park to repay 247.5 million baht owed to ACL Bank with interest of 21% a year from 1996, for a total of 522.22 million baht. As of the end of 2008, the company had set aside a reserve of 689 million baht for the case. On March 4 of this year, the Southern Bangkok Civil Court ordered N-Park to repay Sathorn Asset Management (SAM) 170.18 million baht plus interest, amounting to an estimated 201 million baht. "We are appealing these two cases to the appeal court, based on the theory that new funds (invested into N-Park post-rehabilitation) must get protection according to the law," said Mr Sermsin, who heads the management team that took over after the rehabilitation plan was completed. In another case, the Southern Bangkok Civil Court in June last year ordered N-Park to repay Ocean Life Insurance 200 million baht plus interest, amounting to an estimated total of 390 million baht. N-Park compromised with Ocean and agreed to repay 200 million baht, with the final 50 million due in October. As the company had to set aside reserves totalling 1,079 million baht against pending cases, its shareholders' equity fell from 1.2 billion baht at the end of 2007 to just 47 million at the end of 2008. To fend off financial disaster, the company on Feb 2 this year asked shareholders to approve a capital increase from 12 billion to 36 billion baht by offering 24 billion ordinary shares at two satang each with a par value of one baht. After raising 350 million baht from the issue in mid-February, its equity was around 400 million baht. But it needed to repay 200 million to Ocean Life and set aside new reserves of 201 million after losing the SAM case. "If our equity is eroded and we lose another three cases, now pending in the civil court, we have to exit the SET and enter the process of rehabilitation again," said Mr Sermsin, an architect who has gained enough experience in the courts that he could be a lawyer, his colleagues joke. "Earnings from our normal business operation cannot meet the amounts we are being sued for." When the new management team took over, it adopted a "buy-develop-sell" strategy for real estate and aspired to become a holding company for other investments as well. N-Park's current businesses, all of which provide recurring income, include the Natural Park Apartment on Sukhumvit Soi 49, a serviced apartment building that had 98% occupancy last year. It also owns the Novotel Beach Resort Panwa Phuket with an average occupancy rate of 61%, and the French bakery chain Le Nt{aci}re, which generated revenue of 157.23 million baht last year. It also earned 145 million baht from other businesses. N-Park also has three projects under development or construction: the Kempinski Hotel Bangkok (formerly Siam Hotel and Serviced Apartments) behind Siam Paragon worth 4.5 billion baht; phase two of the Novotel Beach Resort Panwa in Phuket, and the 1.8-billion-baht Amanresort Bangkok Hotel on Charoen Krung Soi 36. For the Kempinski, the company set up a joint venture called Kempin Siam Co Ltd with registered capital of 1.54 billion baht in which it holds 35%. The Bahrain-based investment group Almarna holds 49% and the remaining 16% is held by Royal Wealth Holding, a joint venture between Almarna and Ladawan Holding, a subsidiary of the Crown Property Bureau. "We have no credit," said Mr Sermsin. "We need to set up a subsidiary or a joint venture and seek partners to get credit or we cannot start project development." After setting up Kempin Siam, the company obtained a project loan of 2.5 billion baht from Siam Commercial Bank. The company is also seeking new funds to complete the second phase of the Novotel Beach Resort Panwa, where decoration work is under way. One of the project's investors was Lehman Brothers which collapsed last year, leaving N-Park short of 285 million baht needed to complete the project. "We filed to sue Lehman Brothers two weeks ago as its financial support was not complete," Mr Sermsin said. N-Park also has had to halt the development of Siam Opera, a theatre behind Siam Paragon, due to lack of financing. The company had another 200-rai plot of land in Bang Krachao but had to transfer it to Krung Thai Bank at an appraised price of 611 million baht for debt restructuring. But it will be able to recover the plot within two years if it can repay the debt. "I know everyone is bored and losing money on N-Park," Mr Sermsin told shareholders at a meeting last week. "But there are many unexpected cases for which we have hired 100 lawyers to fight. Why are we [shareholders] fighting each other despite the fact that we're all in the same ICU?" N-Park has even set up a special crisis team and communications link to investors, with the telling e-mail address, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it . Bangkok Post May 4, 2009

 

< Prev		Next >