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COURT FREEZES IPO: PM dealt Egat blow
Share sale delayed, overseas road-show called off, privatisation program in doubt while court assesses decrees. The Supreme Admin-istrative Court yesterday put the brakes on the public sale of shares in Egat Plc, dealing a severe blow to the Thaksin government's privatisation programme.The injunction was issued as Egat, the country's largest power producer, carried out an international road-show to drum up interest in its stock among foreign investors.
The court called for a freeze on Egat's listing plans while it reviews the legality of two executive decrees that led to the controversial corporatisation of the Electricity Generating Authority of Thailand and its impending share sale.
The embargo, a surprise to both the government and the financial-services sectors, prompted a leader of the Campaign for Popular Democracy to call for the public to join forces in repealing the earlier privatisations of PTT Plc and MCOT Plc. The two former state enterprises now traded on the Stock Exchange of Thailand.
Egat's initial public offering (IPO) was due to start today, but the court order means that the international road-show will also have to be called off.
Salee Ongsomwang, chief of the Foundation for Consumers, said the 11 civic groups, which filed the joint petition for the court injunction against Egat's IPO, would submit more evidence to the Administrative Court when it considers further proceedings on this case.
Suriyasai Katasila, secretary-general of Campaign for Popular Democracy, said the earlier listings of the Petroleum Authority of Thailand and the Mass Communi-cation Authority of Thailand should also be revoked if the Administrative Court eventually rules against Egat.
Civil organisations, led by consumer-protection groups, complained to the court that the floating of Egat would lead to higher electricity rates, thus hurting poor households whose welfare would be superseded by stock market investors and shareholders.
The petitioners also argued that the share sale was illegal and asked the court to review the two executive decrees, which had corporatised the state electricity agency, paving the way for its listing on the stock exchange.
Five defendants were named in the lawsuit, including Prime Minister Thaksin Shinawatra and Energy Minister Viset Choopiban, for abuse of power in enacting the two decrees.
Following an urgent hearing, which started last week, the court found that the dispute on Egat privatisation merited a review.
The court declined to suspend the decree provisions because of a possible disruption to electricity services, but found it necessary to stay the launch of Egat's share subscriptions in order to protect investors from damage should the court eventually rule against the two decrees.
Even though Viset had argued to the court on Monday that any delay to the IPO would shake investor confidence, the court was not convinced because the tabling of the IPO was ordered by this court to facilitate its examination.
The presiding judges were Jaran Hattakam, Chanchai Sawaengsak, Thongchai Lumdab-wong, Preecha Chavalitthamrong and Kasem Komsattham.
No government representatives were present when the injunction was read.
Thaksin blamed the Energy Ministry for failing to create a better public understanding of the Bt34-billion share sale.
"Public relations work is not enough," he said before the weekly Cabinet meeting. Viset needed to clarify the facts about the share sale to both local and foreign investors, he said.
Finance Minister Thanong Bidaya said the setback had inevitably turned off investors. In the next Cabinet session he would raise the issue to discuss measures to improve investor sentiment.
However, the Finance Ministry was still confident that the Egat case would not cripple the share sale plans of other state enterprises in the queue to list.
Abhisit Vejjajiva, leader of the opposition Democrat Party, said the court's judgement had given the government an opportunity to reconsider its entire privatisation programme to ensure that the rights of electricity users and other consumers were safeguarded.
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Next legal steps in the court battle
1 The court will convene to examine evidence submitted by the five defendants and counter arguments made by the 11
complainants.
2 A verdict is issued either for or against the two decrees designed to pave the way for privatisation. Should the court rule in favour of privatisation, the injunction against the initial public offering of Egat shares would automatically expire.
3 If the court cancels the two decrees, the planned listing of Egat on the stock market would collapse. If the government still insists on the privatisation, it could explore other legislative options but not rehash the decrees.
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