May 1--Shareholders of the consumer finance firm Krungthai Card rejected a proposal to raise 7.73 billion baht in new capital.

KTC president Niwatt Chittalarn said 31 percent of shareholders attending yesterday's shareholders' meeting rejected the rights issue, which was over the 25 percent threshhold set under the law.

He said the company would now consider alternative funding options to help bolster its financial base.

KTC, the country's leading credit card issuer with 1.6 million customers, sought approval to issue 773.5 million new shares in a rights issue, with three new shares offered for every one share held. The subscription price was set at 10 baht per share.

State-owned Krung Thai Bank, KTC's largest shareholder at 49.45 percent, had pledged support for the rights issue, which was put forward to raise funds to help reduce the firm's leveraging, and to provide working capital to fund business growth.

KTC's debt-to-equity ratio would have fallen to 2.5 times from 7.4 times, with the rights issue. Registered capital would have increased to 10.3 billion baht from the current 2.58 billion.

Mr Niwatt said the dissenting shareholders included foreign shareholders and retail investors.

"[The negative vote] comes as market conditions remain poor, with liquidity scarce in the global market and investors still affected from the downturn in the capital markets," he said.

Mr Niwatt stressed that the company's liquidity remained plentiful, and that the rights issue was aimed at preparing for future growth.

"From now on, we need to control operating expenses and decelerate business growth. With this downturn, it will be hard to improve our net profits this year [compared with last year]," he said.

KTC reported 2008 net profits of 520.39 million baht, slightly below the 520.97 million posted the year before.

The company's credit business posted 6 percent year-on-year growth in 2008. Personal loan growth slowed as KTC tightened lending conditions. The firm had 2.19 million accounts at the end of last year, with 1.64 million credit card accounts, with the rest in personal loans.

Mr Niwatt said the company would seek to curb staff expenses, but denied any plans to lay-off staff.

Past-due accounts had risen to 3.8 percent of total loans in the first quarter because of the economic slowdown, compared to normal levels of 3 percent.

Shares of KTC closed yesterday on the Stock Exchange of Thailand at 6.90 baht, up 30 satang, in trade worth 74.72 million baht.

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