Bangkok: The Securities and Exchange Commission (SEC) has directed East Coast Furnitech Public Company Limited (ECF) to clarify the rationale behind altering the exercise price of ECF-W5 conversion rights from an initially calculated 0.55 baht per share to 5 baht per share. This adjustment could potentially lead to a significant reduction in benefits for ECF-W5 holders, with a deadline set for July 18, 2025.
According to Thai News Agency, the move comes after ECF’s explanation through the Stock Exchange of Thailand’s (SETLink) system regarding adjustments in the rights of warrants to purchase ordinary shares of ECF-W5. This change was due to a modification in the par value of ECF shares from 0.25 baht to 5 baht per share, alongside a right offering to current shareholders and the allocation of additional shares to support the ECF-W6 warrants. The initial exercise price and conversion ratio were set at 0.55 baht per share and 1 unit of ECF-W5 to 0.99 ordinary shares, respectively.
ECF later detailed that the exercise price adjustment to 5 baht was due to a proposal during the Extraordinary General Meeting of Shareholders on July 11, 2567. Despite retained earnings, ECF could not issue supporting shares below par, as governed by Section 52 of the Public Limited Companies Act B.E. 2535. Consequently, ECF recalculated the exercise price to align with the current par value, as setting a price below par would impede the registration of increased paid-up capital from rights exercise.
The SEC, however, expressed concerns that raising the exercise price could adversely affect ECF-W5 holders, deviating from SEC criteria that require warrants to maintain or enhance holder benefits upon exercising rights. The significant price shift may influence security holder benefits, investment decisions, or ECF securities’ market price. Issuing shares below par is additionally constrained by the Public Limited Companies Act.
Invoking Section 58 of the Securities and Exchange Act B.E. 2535, the SEC has demanded ECF provide a detailed explanation regarding discussions with the Registrar of Public Companies before the price adjustment, with a report due by July 18, 2025, to be publicly disclosed via the SETLink system.