ALTERNATIVE ENERGY / BACKDOOR LISTING

Investors buy 33.63% stake in Sea Horse

Nuntawun Polkuamdee

Siritaj Rojanapruk and other business allies yesterday acquired a 33.63% stake in Sea Horse Plc from Vorajate Indamra at a price of one baht per share.

The Stock Exchange of Thailand suspended trading of Sea Horse in afternoon trade after the deal, which was made through 13 big-lot transactions processed through Far East Securities. Shares of Sea Horse last closed at 3.10 baht.

Mr Vorajate sold 440 million shares to Mr Siritaj, 225 million shares to Sakorn Suksriwong, 195 million to Jirapan Srinont and 75 million to Surachai Suksriwong.

Mr Vorajate took a 78% stake in Sea Horse last October in a private placement at 0.63 baht per share, and later announced plans to shift the frozen seafood company into the alternative energy business.

But a deal to have Sea Horse purchase Power Energy, a company controlled by Mr Siritaj, collapsed following heavy scrutiny by market regulators. They ruled that the transaction was equivalent to a backdoor listing and would force the company to reapply for a SET listing. Both Mr Siritaj and Mr Vorajate are ex-partners from their time at the brokerage Bangkok First Investment and Trust.

Yesterday's transactions will cut Mr Vorajate's holdings to 44%. Mr Vorajate will remain a director of the company.

Sea Horse executives said they remained committed to the alternative energy and ethanol business, and could look to purchase assets or shares directly from Boon Anake Co, another firm controlled by Mr Siritaj, to avoid the backdoor rule. Sea Horse last month said it would invest up to 1.3 billion baht in Boon Anake to secure property for the ethanol project.

Boon Anake is 66% controlled by Mr Siritaj, and holds 7,000 rai of land in Nakhon Ratchasima and Chaiyaphum. Sea Horse shareholders last month approved an investment of 1.32 billion baht in Boon Anake, despite SET cautions about risks regarding the rights and locations of the properties involved in the deal.

Sakkarin Ruamrungsri, a SET senior vice-president, said regulators would examine the pricing set by Mr Vorajate for the sale to Mr Siritaj and the other investors.

"We will also consider whether Mr Siritaj and the others have to launch a tender offer. If the investors are related, then a tender offer is necessary," he said. Current law requires a tender offer if an investor or group of related investors acquire more than 25% of a listed company.

Mr Vorajate said the share sale gave him a profit of 37 satang per share from his initial investment.

"Mr Siritaj will help the company's image. I remain the largest shareholder at 45%, and am committed to staying with Sea Horse until the ethanol project is launched in mid-2009," he said.

"I am a businessman, not a short-term investor," Mr Vorajate added. "While the ethanol project might not see income for two years, afterwards we expect strong profit growth thanks to high demand locally and abroad."

Sea Horse aims to eventually produce 1.5 million litres of ethanol per day, with a profit margin of 3-9 baht per litre.

SET regulations require businesses to have a track record of at least three years before listing on the exchange, except for infrastructure projects and utilities operating under government concessions.

The requirement has led several businesses looking to take over existing listed firms to enter the market while avoiding the backdoor listing rule.

Bangkok Post

Friday April 06, 2007