Thailand proposes converting Thai Airways’ debt into equity

Thailand’s Ministry of Finance is preparing to convert Thai Airways International’s debt into equity as part of the airline’s capital-raising plan.

The proposal is expected to be submitted to the cabinet later this month.

Tibordee Wattanakul, director-general of the State Enterprise Policy Office, stated that as a major creditor and 40% shareholder, the ministry is ready to exercise its right to convert the entire debt into equity.

Thai Airways currently has an outstanding debt of approximately THB70-80 billion (around $2-2.2 billion), accrued since 2020. Under the airline’s recovery plan, creditors are required to convert 24.5% of the debt into equity, with the remaining 75.5% left to their discretion.

The ministry’s decision to convert its debt entirely into equity comes amid steady improvements in Thai Airways’ business performance.

Once Thai Airways resumes trading on the Stock Exchange of Thailand (SET), creditors can sell their shares after holding them for a year. Alternatively, those opting for debt repayment may face a waiting period of 11-12 years.

Thai Airways is required to disclose details of the conversion plan to shareholders, enabling them to decide on additional contributions to maintain their ownership stakes. The airline will announce the offering price for the converted shares on December 2.

The Ministry of Finance aims to retain slightly over 40% ownership to maintain management rights without making Thai Airways a state enterprise again. The ministry is also evaluating its capital allocation strategy to align with the proposed share conversion terms.

Thai Airways plans to resume trading on the SET by next May, pending a comprehensive review of its financial health.