True Corp shareholders yesterday approved the issue of 10 billion new shares to raise the telecommunications company's capital to 153.3 billion baht (US$4.43 billion).
The new shares, to be offered in a rights issue to existing shareholders at 1.95 baht (US$0.06) per share, will be registered for trade on the Stock Exchange of Thailand on Feb. 9.
But it appears likely that the offering will fall short, considering the price is at a premium from current market prices. Shares of True closed yesterday at 1.49 baht (US$0.04), down six satang, in trade worth 35.44 million baht (US$1 million).
Major shareholders, including the CP Group at 27.5 percent and the German development bank KfW, have pledged to fully exercise their rights to the offering.
Yesterday's shareholders' meeting featured sharp questions from retail investors about True's financial position and prospects to pay future dividends.
A vote representing a total of 91.25 percent of shares approved the capital increase, which will raise registered capital to 153.3 billion baht (US$4.44 billion) from 53 billion (US$1.53 billiob)through the issue of 10.029 billion new shares with a par value of 10 baht (US$0.29) each.
Ten billion shares will be placed with existing shareholders in a rights issue priced at 1.95 baht (US$0.06) per share. Another 29.9 million will be placed with the International Finance Corp, a unit of the World Bank and a guarantor of outstanding True debentures.
More than 400 people attended yesterday's three-and-a-half hour hour meeting, with many showing scepticism about the company's direction.
One elderly investor said he had held True shares since the company was named TelecomAsia and priced at 104 baht (US$3) per share.
"As far as I can remember, only one dividend has been paid, at 50 satang per share. Frankly, I don't think I want to hold this stock as an inheritance for my beneficiaries," he said.
True chief executive Supachai Chearavanont expressed regret about the frustration shown by investors.
"I feel bad about having to explain each year about our dividend prospects. But we need to understand that the firm's cash flow and accumulated losses make paying a dividend impossible," he said.
"I am quite certain that with this capital increase, I will be able to steer the company closer to profitability."
True, which offers fixed-line, mobile, pay-TV and broadband Internet services, reported a nine-month net loss of 1.16 billion baht (US$33.6 million) on revenues of 46.54 billion (US$1.31 billion).
Mr Supachai said the capital increase would allow the company to pay down debt and finance expansion into third-generation mobile services.
He acknowledged that True Move, the country's third-largest mobile operator, had hurt the company's earnings in recent years due to depreciation of capital investment and interconnection payments to competitors DTAC and Advanced Info Service.
Supachai said the company's financial position had improved in recent years, with debt now at 3.5 times EBITDA (earnings before interest, taxes, depreciation and amortization) compared with 13.5 times in the past.
True's long-term debt is around 70 billion baht (US$2.03 billion), including US$600 million in overseas debt.
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