Thailand’s flagship technology group, Alphatec Electronics Plc, which had dreams of creating a vast electronics empire, but which bit off more than it could chew, is now fighting for survival. What remains of the now highly controversial board has met the holders of $45m worth of the company’s convertible debt in an effort to persuade them not to drive Alphatec into liquidation. Alphatec has been in trouble with its various creditors for some months, its Submicron Technology Plc subsidiary in particular, owes US and European companies more than $190m. Things went from bad to worse on July 2 when the Thai central bank finally gave up supporting the Baht, devaluing the currency by 20% almost overnight, and causing Alphatec’s US dollar obligations to rise like an unassailable mountain. Next, auditors Price Waterhouse dropped the news that all of Alphatec’s profits since 1995 had been fictitious, and that unauthorized payments worth $125m had been made to CEO and major shareholder Charn Uswachoke, behind the shareholder’s and creditor’s backs. Charn Uswachoke resigned, followed swiftly by CFO Leslie Merszei who made allegations of foul play amongst the board and even hinted at large scale cover up involving document shredding. Against this rather unsavory background, Alphatec has failed to redeem its $45m worth of convertible bonds and now the bondholders must decide whether to call in the debt, bankrupting the company in the process, or to allow the board to continue with a restructuring plan that may yield a better return at some future date. The problem is, however, that Price Waterhouse have refused to give out information on the true state of affairs at Alphatec until it receives an indemnification against any legal action brought for failing to spot the irregularities earlier. But with investors not knowing the size of the auditing blunder, a chicken and egg situation looms. In the meantime, the best the company can hope for from its bond holding executioners is a decision to defer the decision.
