Thai stock market suffers as Stark Corporation defaults

Investors were cautioned by stock market regulators regarding Stark Corporation’s shares, as the company is expected to default on payments for corporate bonds valued at nearly 9.2 billion baht. Following a bondholders’ meeting, Stark announced its intention to “call default” on two bond series worth 2.24 billion baht within a month, raising concerns about the company’s ability to pay for three other bond series valued at approximately 6.96 billion baht.

Vonnarat Tangkaravakoon, a major shareholder and director, stated in a filing to the Stock Exchange of Thailand (SET) that the company’s decision to call default makes it highly unlikely that Stark will be able to pay for the three other bond series, also known as “cross default”. Kasikornbank is the representative for four out of the five corporate bond series that Stark is expected to default on.

The Securities and Exchange Commission (SEC) opened a bond information centre to provide investors with necessary information about the bonds, while bondholders’ representatives must follow up on the legal debt repayment process. The SET also issued a warning for trading Stark shares, which resumed after a three-month suspension.

Vonnarat Tangkaravakoon mentioned that other financial creditors might also call for the same treatment as bondholders, and the company is considering negotiating a solution with creditors. He also emphasised the need for caution in paying any group of creditors, as it may negatively affect negotiations with other groups.

Vonnarat Tangkaravakoons said…

“The payment of any debt should be withheld until we reach a conclusion on the method of managing debt payments equally among bondholders and other creditors.”

Stark is currently working on short- and long-term business plans, as well as alternative business plans, to be included in the 2022 financial statement, which is expected to be submitted by June 16. The company’s management plans to inform regulators, creditors, and shareholders about the steps and procedures to be taken.

The SET has allowed Stark shares to be temporarily traded from June 1-30. Stark shares experienced a significant drop of over 90% from 2.38 baht to 0.25 baht shortly after the stock market opened, reports Bangkok Post.