JMT Unveils the Master Plan behind Capital Increase

JMT Network Services Public Company Limited (JMT) is laying out a master plan to take advantage of rising outstanding loans during the Covid-19 pandemic to stand firmly as Thailand’s number one asset management company.

JMT, Thailand’s leading asset management company in bad debt management and used car hire purchase business, recently announced its Board of Directors resolution for capital increase by way of decreasing expired unissued ordinary shares, then issued 311,577,422 newly ordinary shares with a par value of 0.50 baht per share through Rights Offering at a ratio of 4.558 – 5.042 existing shares to 1 newly issued ordinary share with an offering price of THB41.50 per share.

If the newly issued ordinary shares are fully subscribed, JMT will be able to raise 10,000 million baht from this capital increase.

 

The move came on the same day that VGI Public Company Limited (VGI) officially announced its plan to acquire 15% of Jay Mart Public Company Limited (JMT), JMT’s parent company. Meanwhile, the Board of Directors of U City Public Company Limited (U) also approved the resolution to acquire 9.90% of the shareholding in JMART and 24.90% in Singer Public Company Limited (SINGER), a subsidiary of JMART.

Even though JMT did state in the announcement that the company planned to use the proceeds received from this capital increase as an investment in quality projects that generate returns and also for working capital and debt repayment, some investors raised questions that there could be some connection between the VGI-JMART move.

 

Mr. Adisak Sukumvitaya, Chairman of JMT, told Kaohoon Online that the resolution for the capital increase was not connected to the aforementioned acquisition in any way.

“The purpose for this capital increase is to raise funds in preparation for bad debt purchasing from the banks,” said Mr. Sukumvitaya.

The Chairman pointed out that 500 billion baht is a normal level of the outstanding loan per quarter, but currently, outstanding loans surged over 1.5 trillion baht which gives asset management companies such as JMT a great opportunity to purchase once available.

 

According to the data published in the Bank of Thailand, commercial banks alone recorded more than 545 billion baht of non-performing loans.

Amid an intensifying impact of the Covid-19 pandemic, NPLs have been surging within Thai banks. Even though the rise started to stabilize at the end of June 2021, it was considered high when compared to the pre-pandemic level. Moreover, Thailand had seen its worst impact from the coronavirus pandemic in late July and August that daily Covid-19 cases surged from several thousands to twenty thousands due to the highly contagious variant, Delta, which led to another and longer lockdown measures in August.

 

It would be no surprise if Thai banks will record higher NPLs in their 3Q financial statement.

On the other hand, it will be a great opportunity for Thailand’s number one asset management company, JMT, to get ready for bad debt collection.