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Shin Corp buyout key to the deal
Government may have to buy shares on SET

The Thai government will be unable to buy Thaicom Plc outright from Singapore-based Temasek Holdings without first taking complete control of Shin Group, the satellite firm's parent company, warns Thaicom chief executive Arak Chonlatanon.

But the government could acquire the SET-listed satellite operator through share acquisitions through the exchange. The government must acquire at least a 25% stake in Thaicom in order to play a decision-making role in the company. The state must also take over all of the company's subsidiaries including the internet provider CS LoxInfo and the mobile businesses in Laos and Cambodia.

Mr Arak said Thaicom was owned directly by Shin Corp in which Temasek is the major shareholder.

"If the government wants to gain management control in Thaicom, it is required to have at least a 25% stake in the company which means a tender offer must then be launched," he said yesterday, speaking from Singapore where he attended the Thaicom exhibit at the CommunicAsia 2010 trade fair.

He denied rumours that he was in discussions with Temasek.

Thaicom's had 1.096 billion total shares outstanding as of March 31, with a book value of 14 baht per share.

Mr Arak said the government's announcement that it would purchase Thaicom from Temasek had caused confusion in the market and among the company's employees. It also showed that the government had "little knowledge" of the acquisition process, he said.

He cited Temasek's 2006 takeover of Shin Corp, when it bought out the holdings of former prime minister Thaksin Shinawatra, as an example. Temasek could not buy Thaicom without the Singaporean state investment arm also taking over Shin Corp.

Mr Arak said he did not understand why the government needed to buy back Thaicom as the company's satellites and orbital slots still belong to the state.

In addition, he doubted the state's ability to manage the satellite business if it did gain management control of the company.

Management and decision-making have been executed only by Thai executives and without Temasek's involvement. This should allay fears over national security, he said.

Mr Arak also rebutted reports that Thaicom was refusing to launch a sixth satellite as a backup for Thaicom 5, saying the company had proposed its feasibility plan to the ICT Ministry some time ago and was still waiting for a reply.

Thaicom has already conducted various feasibility plans for the potential acquisition of a sixth satellite, both through purchasing or leasing, Mr Arak said.

But he said Thaicom would decide to purchase a new satellite only if the government agreed to extend the concession term beyond the existing 30 years.

"What we want to see now is for the government to talk with us directly in order to seek a resolution," he said.Mr Arak also denied reports that iPSTAR was an illegal satellite due to changes made to the satellite, offering an analogy.

"Say a land owner initially wants a contractor to build a one-storey house on the land. Then one day, the owner tells the contractor that because land prices have surged he should add another storey to increase space and rental revenue.

"Then later, the land owner says the house construction [in accordance with the terms of contract] cannot feature two stories. It wants the contractor to demolish the second storey or demolish the whole house.

"This is not our fault based on the fact that the government had earlier approved us to do so [modify the iPSTAR satellite]. If the government wants to cancel the contract, it must compensate us."

He said the buy-back plan could be an attempt by a particular group to manipulate the company's share price.

Thaicom shares (THCOM) closed yesterday on the SET at 6.50 baht, down 70 satang or 9.72%, in trade worth 500 million baht.
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