o The major shareholder has issued a further guideline that projects must be tendered with a profit. In Thailand’s current climate, such guideline effectively ensures a significant reduction in turnover and increased losses due to fixed overheads.
• Time Shortage
o Based on current business projections, refer Annexure 2, the company will have insufficient funds to continue to operate adequately much beyond the 3rd quarter 2015.
o As 2008 demonstrated, if insufficient working capital is available, a construction company will spiral rapidly into bankruptcy as both customers and suppliers will restrict payments and credit. In 2008, this period was just three months.
• Recent Change in Commitment by the Major Shareholder
o The major shareholder has made a commitment to KTech in the past. Judicious support of the company by funding, securing of projects, personal attendance in the office, involvement in fine detail in the operations of the KTech, and a commitment to create a company that is suitable to recommence trading on the SET evidenced this.
o Recently, however, the major shareholder has given strong indications that such level of commitment may not be sustained for the future. This is evidenced by statements and instructions to staff including:
There will no further loans advanced to the company;
Loans that are arranged are very short term (only 2-3 months) and at interest rates of 15% (which is unsustainable);
There is little concern whether the company can return to trading on the SET or not;
The company should wind back its construction operations;
No technical support need be provided to Myanmar operations.