SET Warns GJS’s Shareholders to Carefully Study ฿117M. Loan as IFA Opposes Transaction

The Stock Exchange of Thailand (SET) requires the shareholders of G J Steel Public Company Limited (GJS) to study information of financial assistance transaction worth THB 117 million to G Steel Public Company Limited (GSTEL) (major shareholder of the company) which is considered as the company’s connected person. Moreover, Independent Financial Advisory (IFA) has an opinion that shareholders should not ratify this transaction. For this reason, SET requires the shareholders to maintain their rights by attending to the Annual General Meeting (AGM) which will be held on April 29, 2019 at 9.30 a.m. at Arnoma Hotel, Bangkok.

GJS will propose the shareholders to ratify the financial assistance transaction to GSTEL (the major shareholder holds 17.44% of shares) with the short-term loan amount THB 94 million with no collateral at 12.50% of the interest rate per annum and the due date is on May 15, 2019. The total amount of the loan size is THB 117 million, therefore, this considers as a connected transaction. And the transaction size is ≥ THB 100 million.

However, IFA’s opinion is that shareholders should not ratify this transaction as follows

1) Not enough evidence to ensure the GSTEL can make the loan payment to the company by May 15, 2019. Currently, GSTEL has stopped its operation and also obtain legal execution from several debtors

2) The loan rate at 12.50% per annum is an inappropriate rate because it is lower than the finance cost of the company at 14.85% per annum and also the rate is lower than the loan rate that GSTEL has to pay in order to make a loan with other parties and there is no condition for the company to lower the lending risk such as collateral and guarantee.

The Board of Directors and the Audit Committee have opined that shareholders should ratify this financial assistance transaction because it benefits the company as a whole group for financial restructuring. The source of loan is from operating cash flow. After offering the loan, the company has enough liquidity to operate its business and the lending rate is appropriate. Moreover, the company does not have any negative impact. In case of GSTEL default on the loan, the company will take the legal action against GSTEL immediately. However, the company believes that GSTEL will start to generate income when the company starts its operation in May 2019.

Therefore, SET requires the GJS’s shareholders to carefully study information and IFA’s report and maintain their rights by attending to the AGM which will be held on April 29, 2019 at 9.30 a.m. at Arnoma Hotel, Bangkok. The connected transaction is required to be approved by the shareholders’ meeting with voting at least three-quarters of the total shareholders attended the meeting who are entitled to vote excluding interested shareholder’s equity.