Rama 3 Land fails to pick up new partner
Rama 3 Land Co, the developer of SV Complex on Rama III Road, is on the brink of bankruptcy after the administrator of its debt-rehabilitation plan failed to get a new partner to revive the huge condominium project over the past six years.
The Central Bankruptcy Court will announce on Oct 21 whether the company will go through the bankruptcy process. If the court says so, the Legal Execution Department will foreclose the assets and wait two years before auctioning them and repaying creditors. The court may delay its decision if someone files an appeal.
Rama 3 Land is a joint venture between Sahaviriya City Plc and a Hong Kong developer that went bust during the 1997 financial crisis.
Currently, its major creditors are Thai Asset Management Corporation (TAMC), which accounts for 27% of total debts of 11 billion baht; Sahaviriya City Plc, which accounts for 21% of total debts; and around 1,000 to 1,100 buyers of condominium units. The project comprises the four-tower SV Garden facing the street and the three-tower SV Royal Park overlooking the Chao Phraya River.
Now that Sahaviriya City Plc has gone bankrupt, its major creditor has become TAMC.
Peter Noel Schiefelbein, the senior executive director of the plan administrator Asset Planner Co, blamed TAMC for failing to co-operate with the restructuring plan after Rama 3 Land entered the rehabilitation process in 2001.
He said that during 2003 and 2004 the plan administrator managed to attract Growth Water Woods Co as the new partner to continue project development and deliver the units to buyers. However, TAMC opposed the plan and the company withdrew.
The administrator later could not find a new partner for the company as potential investors backed away from fear of not securing co-operation from the major creditor and because of the slowing economy.
Asset Planner, a subsidiary of the financial consulting firm Churchill Pryce, finished its five-year term plus one-year extension as the plan administrator on Aug 23 but the creditors voted on Sept 4 not to renew its contract for another year.
A company source said the official receiver representing Sahaviriya City had to vote "no" for the proposal to renew the contract with the plan administrator because the creditors, of whom TAMC has the largest vote, decided so on Sept 2.
He said that Asset Planner in May also received a notice from the Bangkok Metropolitan Administration about the buildings' safety. It then hired experts to inspect the buildings and they recommended that the structures be demolished.
He said 95% of unit buyers agreed with demolition so the debris could be sold and the net amount shared among creditors but TAMC opposed the plan.
The source said that since the unit buyers were considered non-secured creditors, their right to be repaid would be subordinate to that of the secured creditor TAMC and they were unlikely to get any money back.
He said that explained why TAMC wanted to see the company enter the bankruptcy process though the value of the assets fell short of the total debt. As the largest secured creditor, the state agency would likely receive all the assets sold at forced value, which would be much lower than the estimated market price.