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Thailand update

To: All New Nordic Customers  

We are writing to advise and update all customers as to the current status regarding your investments in the properties of New Nordic Development and other companies in the group.  

Business Reorganisation of New Nordic Development Co Ltd
We continue to wait for the Appeal Court to hand down its decision in respect of NND’s appeal against the decision of the Bankruptcy Court to deny NND’s application for business reorganisation. At this time, there is nothing more that can be advised additional to what has been advise previously except to note that it is 9 months since the appeal was lodged.  

The business of New Nordic Group
We are pleased to note that Thailand’s tourism is continuing to show significant and healthy recovery. More than 11 million foreigners visited Thailand in 2022, exceeding the forecast of the Tourism Authority of Thailand, and in 2023 the forecast is for 28 million, again exceeding the Tourism Authority of Thailand’s previous estimates. The return to around 40 million visitors, the level prior to the COVID global pandemic, is now expected to occur by 2025.  

The majority visitors to Thailand continue to be from Malaysia and India, however the return of Asian based visitors and European visitors is recovering steadily. Unfortunately, the significant increase in Chinese visitors to Thailand forecast to arrive starting in March or April after the unexpected lifting of restrictions of international travel from China in January 2023, has failed to materialise. Reports of a struggling China economy, the loss of savings consequent to the COVID pandemic, the promotion of domestic tourism to boost China’s own economic recovery, and the uncertainties surrounding global inflation, seem to be having a significant impact. At this time, it is forecast that the Chinese tourist market is unlikely to resume significantly until next year.  

As a consequence, whilst other areas of Thailand, e.g., Bangkok, Phuket, have recorded significant growth on occupancy and room rates, this appears not to have been the case for other area such as Pattaya and Koh Samui, where the growth has been a little sluggish, and occupancy and room rates are not recovering as fast.  

Unit Leasing
As advised previously, the asset leasing business of New Nordic exhibits a direct and strong correlation with visitor numbers. Therefore, to cater for the return of international tourists New Nordic is starting to gear up its asset leasing business to ensure adequate room supply in good condition is available to meet demand.  

For this, NND has:
·       Initiated a contract with a Pattaya based sales agent to promote short term leasing of NND units under management;
·       Embarked on a program of restorative repair and maintenance work on buildings with a view to doubling available unit availability by the year end to cater for the anticipated increase in demand in the coming tourist high season.  

In respect of unit leasing, NN group requests customers to understand that, at this time, the business of NN group is still in the recovery phase. Total income is not yet matching with total operating costs and that NN group is having to prepare itself for the future. This means, if any unit is leased out, the income must first be directed to costs so that NN group can survive. It will be only after costs are covered that any rental returns can be generated.  

Transfer of Units
With respect to the transfer of units, as advised previously, the issues related to the Lands Department registration were solved. Subsequently, a number of customers who have wished to transfer ownership or register a lease over their units have now been able to do so.   

Please contact the Sales Department if you too wish the register ownership or lease and staff will assist with the necessary procedures and documentation that needs to be done.  

Business Plan
Business Reorganisation represents the best option for NND to proceed and deliver the best outcome to all customers on an equitable basis and management is hopeful that the Appeal Cpurt will soon hand down a decision that will enable NND to work on its recovery.  

In the event that a decision is not in support of NND’s application, by law, NND will need to wait for another 6 months before a further application can be petitioned to the Bankruptcy Court. During this time and the time before a further application can be made, the civil cases brought by various creditors will continue.  

During this time, the focus of NND is to complete as many of the projects as possible so that units can be transferred. At this time, NND will need to work on these projects on a ‘project by project’ individual basis and will be discussing options with the respective customers in each project. Relevant customers can expect to be contacted within the next few weeks as NND finalises its work schedule.  

The New Nordic project at Petchaburi
As previously advised, there was an issue with Forestry Department which related to the presence of forestry lands on the Petchaburi site. This issue only arose after construction of the sales office commenced. The issue has now been resolved which resulted in the loss of approximately 70 rai of land being available for development in the whole site which is in excess of 550 rai in total area.  

As such, the loss of developable lands has not had any impact on the number of units to be constructed; only on the layout.  

Currently, NND is undertaking the following:
·       Registration of the forestry land area survey on the lad title deeds to ensure exact compliance with development restrictions,
·       Replanning of the site and building layout to amend the location of the units in compliance with the revised title deeds; after which
·       Renewed development applications will need to be lodged with planning authorities.  

The Future
New Nordic wishes to once again confirm its customers that management is committed to making the business of New Nordic survive with particular focus on the interests of its customers and a wish to deliver the best possible outcome for its customers.  

Management seeks the support and understanding of customers to achieve this.