Siam Commercial Bank (SCB), the country's second-largest lender by assets, conservatively estimates it can recover more than one-third of Sahaviriya Steel Industries' (SSI's) 22-billion-baht debt after the country's largest hot-rolled steel maker completes its 12-year debt rehabilitation plan.
The bank forecasts SSI will pay back 8 billion baht, or 36%, of the 22 billion owed to SCB, said Arthid Nanthawithaya, SCB's chief executive and president.
SET-listed SSI and its loss-making subsidiary, SSI UK, which operated a steel plant in Teesside, England, borrowed a combined 48.4 billion baht from three lenders -- 22 billion each from Krungthai Bank (KTB) and SCB, and 4.4 billion from Tisco Bank.
The firms defaulted in September 2015, but the three banks had fully set aside loss provisions for the loans.
The company's domestic business operation still has positive cash flow, with earnings before interest, tax, depreciation and amortisation of 2.8 billion baht last year, Mr Arthid said. SSI has already paid 1.24 billion baht in principal to SCB.
Under the debt rehabilitation plan, SCB, KTB and Tisco Bank also converted some parts of their loans to SSI shares. SCB acquired 4.46 billion shares in SSI at a price of 0.05 baht per share, constituting 223.5 million baht or 40.22% of SSI's paid-up shares.
"With SSI's positive business outlook, that will widen the bank opportunities to make an exit in case the firm manages to find new strategic partners," Mr Arthid said.
Apart from SSI, SCB recently subscribed to 400 million newly issued shares of SET-listed Pace Development Corporation Plc, worth a combined 204 million baht, to help improve the property developer's financial liquidity. After the recapitalisation, SCB holds a 9.62% stake in Pace.
"Pace's loan is still classified as performing, and the bank has supported and monitored its business operations closely," Mr Arthid said.
Pace's MahaNakorn development, a mixed-use project comprising super-luxury condominiums, a hotel and retail space, has sold 70% of its total units, 60% of which have already been transferred.
SCB shares closed Thursday on the Stock Exchange of Thailand at 138 baht, down two baht, in heavy trade worth 1.55 billion baht.
