* Total debt claim on SSI including interest is 69.2 bln
* Banks expect court move to improve their financial
* SSI hit by weak domestic steel demand, China oversupply
By Manunphattr Dhanananphorn
BANGKOK, Dec 16 A Thailand bankruptcy court has
approved a $1.94 billion debt-restructuring plan for the
nation's biggest steelmaker, Sahaviriya Steel Industries Pcl
(SSI), a move that Thai lenders said would help them
improve their finances.
Thailand's Central Bankruptcy Court cleared the steelmaker
to implement the restructuring plan after some 91.90 percent of
its creditors voted in favour in September, SSI said in a
statement on Thursday.
"Our financial position should improve because the loan loss
coverage ratio is expected to rise after the court gave nod to
SSI debt plan," Kittiya Todhanakasem, chief financial officer at
Siam Commercial Bank (SCB), told Reuters on Friday.
Loan loss coverage ratios measure banks' ability to
withstand future losses from bad loans, and are calculated using
the provisions set aside for future losses and the total volume
of non-performing loans (NPLs).
SCB's coverage ratio was at 128.9 percent at the end of the
Analysts expect SCB's coverage ratio to rise to 159 percent
after the SSI restructuring is completed.
SCB, Tisco Bank and Krung Thai Bank are
three major SSI creditors which made syndicated loans to the
steelmaker to acquire a British steel mill in early 2011. The
combined exposure of the three lenders to SSI is 49 billion baht
The Thai banking sector's bad debt rose last year after
money lent to SSI and its UK subsidiary was classified as NPLs,
requiring lenders to set aside special loan loss provisions.
"NPLs of the bank industry should reduce. SSI debt
restructuring should help improve the outlook of the overall
sector, especially the bank's creditors," said Sakchai
Peechapat, president of Tisco Bank.
The steelmaker became the country's largest corporate debt
defaulter since the 1997 Asian financial crisis after it
shouldered losses from the UK subsidiary.
SSI UK went into liquidation in October 2015 after
mothballing its Redcar plant in northeast England and cutting
SSI, which has made losses since 2011, has been blighted by
sluggish domestic demand and a weak global market as a result of
oversupply from china.
The steelmaker said the total debt claim was 69.22 billion
baht ($1.94 billion), including 5.3 billion baht interest, and
the restructuring plan involved debt-to-equity conversions and
debt repayment to 13 groups of creditors.
($1 = 35.7600 baht)
(Reporting by Manunphattr Dhanananphorn; Writing by Khettiya
Jittapong; Editing by Keith Weir and Muralikumar Anantharaman)