Italian-Thai Faces Axe Over Legal Wrangle by Phairath Khampha 24 March 2002 Contract could be secured by partners Employees of Italian-Thai Development working on the Nong Ngu Hao airport project could lose their jobs because of a legal wrangle over the company's debt-restructuring plan. But the airport terminal contract could be secured by its Japanese partners. Italian-Thai Development claimed that the delays in restructuring its debt were not a reason to exclude it from the contract to build Suwannabhumi Airport. Italian-Thai signed the 36-billion-baht airport terminal contract with New Bangkok International Airport Co on November 9, 2001, through its ITO Joint Venture. But the legality of this contract was challenged because the Central Bankruptcy Court banned Italian-Thai from entering into any legal agreements until its debt restructuring plan was completed. Under the September 23 ban, Italian-Thai must seek approval from the court and Italian-Thai Planner, comprising Italian-Thai and its creditors, before entering into any legal agreements. This matter could also affect some of its other projects, such as the work it is doing on the Nam Theun 2 hydropower project in Laos as the company's finances and assets could be frozen. Srisook Chandrangsu, the transport permanent secretary and acting NBIA managing director, said construction of the airport terminal would not be affected, even if Italian-Thai's contract faced legal problems, because Italian-Thai's partners in ITO Joint Venture would take over the responsibility. They are the Takenaka and Obayashi companies. Mr Srisook confirmed that he consulted the legal issue with the Attorney-General's Office and said the November 9 contract required remaining joint venture partners to take over the responsibility in case a partner was unable to implement the contract. Both Takenaka and Obayashi showed they had enough financial support to build the airport terminal, he said. The contract also allows NBIA to exclude problematic partners from the terminal project without having to pay them compensation. Immediate concerns centred around the pile-driving contract, which Italian-Thai was handling on its own and which would be directly affected if the company's debt-restructuring plan was not endorsed, Mr Srisook said. The construction firm completed over half the task in seven months of the two-year pile-driving contract. Transport Minister Wan Muhamad Nor Matha said the airport terminal contract should continue since ITO's creditors vowed to lend up to 54 billion baht (1 US Dollar = 43.24600 Thai Baht) to the construction. Court's view sought on Italian-Thai role - Construction firm's debt restructuring plan is core issue The New Bangkok International Airport sought the view of the Central Bankruptcy Court to clarify if debt-ridden Italian-Thai Development Co was capable of building the main terminal and concourse of Suvarnabhumi Airport. A letter was sent to the court in the middle of March by Srisook Chandrangsu, the permanent secretary for transport and acting NBIA managing director, seeking its view if the firm's delayed debt-restructuring would have a negative impact on the planned Suvarnabhumi airport, a NBIA source said. "The prestigious Suvarnabhumi airport should not be tainted with questions on the transparency of the contracts," the source said. Delays in Italian-Thai's debt restructuring have prompted concerns over its business outlook. Italian-Thai in the middle of March submitted a revised debt restructuring plan which involves a debt-to-equity conversion, capital raising and an extension of the debt repayment period to the Central Bankruptcy Court. "It might be possible that Italian-Thai is kept as a 'sleeping partner' in the consortium, if it failed to settle the debt deal. But as a result Italian-Thai could no longer claim the airport contract to seek new loans from banks," a source said. The NBIA source admitted Italian-Thai was well equipped with skilled workers, experiences, and construction materials and was still needed in the project. However, Chatichai Chutima, Italian-Thai vice-president, said the company was qualified to take part in the project. He claimed that delays in restructuring its debt should not be a reason to exclude it from a contract to build the airport.