No end in sight for Group Lease woes

Shares plunge again as forced sales kick in

Group Lease (GL) shares continued their free fall yesterday, sliding nearly 30% as investor anxiety over intercompany loans lingered.

GL shares fell 29.9% to 17.70 baht in trade worth 298.5 million baht.

The share price is down 70% from the market close of 59 baht at the end of February and 74% from the intraday record high of 69.75 baht on Dec 16 last year.

In terms of market value, 78.3 billion baht has been wiped out since the market close on Dec 16, 2016.

An auditor’s disclaimer in Group Lease’s 2016 financial statement published on Feb 28 triggered the sharp sell-off.

The 10-page disclaimer voiced concerns that the vehicle leasing firm’s loan and accrued interest, worth 3.48 billion baht and representing 40% of Group Lease’s total assets at the end of 2016, was extended to its Singaporebased subsidiary, which in turn lent to two other subsidiaries in Singapore and Cyprus.

Still, the two subsidiaries provided further loans to about 100 Cambodian motorcycle dealers who have pledged their shares in Group Lease against those loans. Other collateral includes securities of properties in Cyprus and Brazil, Cypriot government bonds and stocks of other overseas companies.

Thawatchai Assawapornchai, research manager at ASL Securities, said investors remain worried over Group Lease’s intercompany loan and proceeded to jump in on the selling spree bandwagon to lower their risk exposure.

The recent steep fall in GL shares has also triggered forced selling of the vehicle leasing firm’s shares in margin loan accounts, Mr Thawatchai said.

GL shares and GL warrant-4 were included in the Stock Exchange of Thailand’s cash balance list last Friday evening, further aggravating the situation.

Investors who want to pile into stocks on the cash balance list are required to deposit cash before submitting buying orders.

Analysts are keenly waiting for Group Lease’s official information disclosure to the SET, as the amount of the loan and receivable interest, for which the auditor has expressed concerns, is significant, Mr Thawatchai said.

“We cannot analyse this case until the company discloses information officially through the SET,” he said.

The SET required Group Lease’s official clarification about the loan by yesterday, but the clarification was unavailable at press time.