BIG C FUND RAISING PLAN IN DOUBT

Uncertainty surrounds a plan by Big C Supercenter Plc to raise 25 billion baht in new funds after the postponement yesterday of an extraordinary general meeting (EGM) of shareholders.

The delay was announced only four hours ahead of time despite a tremendous effort by the company to encourage all shareholders to attend via thousands of phone invitations and advertisements in 10 newspapers this week.

In a statement to the Stock Exchange of Thailand, the company said it was postponing the meeting because of flooding. The SET has been advising companies lately to take flooding into account when scheduling shareholders' meetings.

An undisclosed source said Big C had held three board meetings this month solely to confirm the EGM date. The decision to postpone should have been made by Tuesday at the latest to give all shareholders at least two days' notice.

"I received a phone call from Big C asking me not only whether I would attend the meeting but also if I planned to support the capital increase. This is quite the most unusual phone call I've ever received," said one shareholder.

The company wants to issue 350 million new shares in addition to the existing 801 million to raise 25 billion baht.

However, few details have been sent to shareholders. A brief statement on the capital increase form says the funds are needed to repay debt from the acquisition of the Carrefour business last year and to increase liquidity.

Big C management said at a Jan 5 EGM that the Carrefour acquisition would be funded through five-year loans with no negative impact on dividend payments or business expansion.

The cost of funding the acquisition with debt is only 4.5%, while a capital increase would cost at least 15%.

Some analysts say the capital increase could help reduce net debt of the Casino Group _ the major shareholder in Big C at 65% _ as Big C is consolidated into the French company's global statements.

At a company roadshow late last month, a regional expansion plan was presented for Southeast Asian countries, organically and through acquisitions.

Big C shareholders questioned the exclusion of Vietnam from the plan, given the success of Casino-owned Big C stores there. Big C now receives only a licensing fee from the Vietnamese operation.

An analyst with a foreign brokerage said that if the capital increase was intended only to repay debt, then that was not a rational strategy and contradicts management's past statements.

"It will not only place a financial burden on shareholders but also dilute earnings. However, I strongly support the capital increase if it is to serve expansion and not repay debt," said the analyst.

A source from the Central Group, a shareholder in Big C, said that even without the extra funds, Big C could comfortably expand its business.

A Big C statement said it was confident the capital increase would receive the necessary support and approval of shareholders at the reconvened meeting as recommended by the board.

Big C shares closed yesterday on the SET at 107 baht, down 50 satang, in trade worth 77 million baht.