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THAI Refuses to Subscribe to New Nok Air Shares
25th May 2017
Although it seemed like a done deal, Thai Airways International (THAI) changed its mind at the seemingly last moment and refused an offer to subscribe to 245 million new Nok Air shares.
This could have great implications when it comes to the level of control the Thai national carrier has over the budget airline. First of all, the decision will decrease THAI’s share in Nok Air from 39.25% to about 20%. This would mean that THAI’s decision-making position in Nok Air will not be as strong as it was until now.
As a result of it losing its position, THAI’s plan to remove or tone down Nok Air’s CEO Patee Sarasin’s role in the company has also been put in jeopardy. This was an important part of THAI’s overall strategy for Nok Air and the other affiliate airline, Thai Smile, to create a joint management through THAI Group.
An insider acquainted with the matter said:
They think that a professional manager who understands the aviation industry should be sought to ensure that Nok Air would be competitive in the current circumstances.
Despite this, THAI remains the largest shareholder in Nok Air and it is not impossible, according to Transport Minister Arkhom Termpittayapaisith, that the carrier won’t buy more Nok Air’s shares in the future.
Nok Air “Fine” with THAI Sitting This One Out
As for Nok Air, the airline doesn’t seem too alarmed by THAI’s decision to not subscribe to new shares offering. According to the CEO, the carrier “has received a very good response from other shareholders who not only subscribed by rights, but also oversubscribed substantially”.
Nok Air issued 781.25 million new ordinary shares. 625 million of these were given to existing shareholders at a ratio of one new share per one existing share.
This exercise, Nok Air hopes, will raise it around 1.5 billion baht it can then use for its turnaround programme. This would raise the airline’s capital from the current 625 million baht to 1.4 billion baht.
Until Wednesday, Nok Air didn’t reveal who subscribed to the new shares, although a senior THAI executive said that a Chinese investment group and Singaporean low cost carrier Scoot (with which Nok Air already has a JVV airline Nok Scoot) stepped in to fill the gap left by THAI.
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