Plans to restructure around USD275 million of debt incurred by Thai telecoms company Jasmine International before the 1997 Asian currency crisis have descended into chaos after executives at the beleaguered company forged ahead with contentious new plans which favour domestic creditors over international ones. Under the original plan, all creditors were set to receive full repayment of monies owed over a six-and-a-half year period at reduced interest rates, although the proposal failed to address cutting Jasmine’s principal debt. The deal was struck at a time when many Thai concerns were floundering after the collapse of the baht. However, Thaksin Shinawatra’s election to the office of Prime Minister in January 2001 proved a catalyst in the slow deterioration of relations with the company’s creditors, made worse by Shinawatra’s policy of seemingly supporting stricken domestic companies at any cost.
In February 2002 Jasmine, now controlled by the PM’s son, defaulted on its repayments and pushed for a new debt restructuring plan that will see its largest creditor, Bangkok Bank, repaid in full, while other mainly foreign creditors would receive just 17% of what they are owed. Jasmine argues that the new plan is legal under Thai bankruptcy law, but its angry international creditors say the move is in ‘bad faith’ and haveaccused the telco of deliberately defaulting in February this year in order to create a crisis of confidence in which the new measures could be steamrollered through.