New Nordic (Thailand) – November Newsletter

CREDITOR AND CLIENT UPDATE – NOVEMBER 2021
• This newsletter is initially being sent in ENGLISH, but we will follow up with French and Russian shortly
• Cette newsletter est initialement envoyée en ANGLAIS mais nous ferons un suivi en français et en russe sous peu
• Этот информационный бюллетень изначально рассылается на АНГЛИЙСКОМ языке, но вскоре мы свяжемся с ним на французском и русском языках.

Dear Client,

It is likely the Thai economy will expand by only 1.2% this year, even after the reopening of the tourism sector. The country’s nationwide reopening to vaccinated visitors started last month and marginally improved economic activities in the fourth quarter. Next year’s growth is forecast at 4%.

Thailand has seen a decline in Covid-19 infections and hospitalizations as vaccination rates rise and the target is to achieve near 80% fully vaccination rates by the end of 2021.

The average daily infection rate has dropped below 6,500 cases this week from a peak of more than 20,000, Government data showed.

Thailand plans to add more nations to its current list of 63 territories eligible for quarantine-free travel from December to boost tourism even further. It’s also considering accelerating the reopening of bars and nightclubs after the outbreak has eased and this is currently scheduled for mid-January next year. However, all this is now subject to the emergence and impact of the Covid-Omicron variant.

The government’s steps to support growth include measures to boost consumption, exports, private investment, public spending, and the recovery of businesses. The government is spending the equivalent of 14.6% of GDP on its post-COVID stimulus measures.

This positive news has led several clients to ask us how this will affect the completion of New Nordic projects and what this means for their rental guarantees and cashback agreements.

To answer this, we need to address New Nordic Development separately as they have entered a court-supervised business restructuring process. This means that any contracts or agreements, or indeed anything that might adversely affect the ability to repay creditors has been suspended and is prohibited. Whilst this is frustrating, this is done to ensure the approved business plan provides creditors with a better outcome than the liquidation of assets and results in a profitable business in the future.

Due to a small number of objectors, (it appears mostly due to misunderstanding of the rehabilitation process under the Thai Bankruptcy law), as well as court delays due to stretched and congested schedules, again caused by the COVID pandemic, it is unlikely a plan will be put to creditors before the end of 2022. Until then, as we have said, we cannot commit to payments, reimbursements, special deals, unapproved purchases, new contracts, or any action that can affect the company’s assets and cash position.

For the other projects, such as Chumphon, Koh Samui and Phuket, the situation is that all available cash reserves are being carefully managed. External advisors are assessing these projects and, unfortunately, the post-Covid economy will mean some may have to make an application for a similar rehabilitation process to New Nordic Development. Until that happens, it isn’t possible to continue to make payments to clients or indeed re-start projects.

Additional focus has been placed on investments within the group and we are working on recovering inter-company loans. As you have already been advised, New Nordic, like most developers, used surplus cash to finance other projects rather than seeking expensive bank financing or leaving the cash languishing in bank accounts earning extremely low interest. When operations were unaffected by Covid restrictions, this was a legitimate strategy to rapidly develop the group and provide creditors with contracted returns. Covid has meant this strategy has to be reviewed and it will take time to normalise the financial situation within the group.

Whilst the media is upbeat on the recovery of the Thai economy, the reality is that Thailand has missed this year’s peak tourist season and, therefore, New Nordic’s businesses will take considerably more time to bounce back to pre-Covid levels. The Thai economy was already in severe recession in 2020, with a GDP contraction of 6.2% year-on-year and the fourth wave of Covid-19 has meant this slowdown has continued with a meagre growth rate of 1.2% this year. The most significant shock for the Thai economy was the global bans on international tourism and travel

Finally, we encourage individual investors to seek independent, professional, and experienced legal advice to register their rights and claims. We are aware that some consultants and firms are advertising “satisfaction guaranteed” but advice should confirm, where individuals pursue reimbursement outside the rehabilitation process, this will not result in any recovery given that these independent actions are not allowed to proceed by the courts. These additional actions are causing significant and ultimately pointless additional costs both to the creditor and to NND as we address these cases. We will be seeking similar automatic stays of proceedings as the other group companies enter the rehabilitation process.

We understand this is frustrating, infuriating and has put many clients in financial difficulties. However, New Nordic is not alone and started early on a process to revitalise our business and review all activities. It remains our commitment to provide each of you with the best possible outcome and we will continue to communicate regularly, but we ask for continuing patience as we gauge the impact of Thailand’s reopening on New Nordic operations and how this can impact our commitment to you.

If you have any questions or concerns you can always contact us through the creditor portal helpdesk@nng-restructuring.com

New Nordic Restructuring Team