The stock price of Warrix Sport Public Company Limited (mai: WARRIX), a Thai-listed sportswear company, surged by 7% last Friday following reports of the company’s major shareholder divesting stakes to Hi-Tech Apparel Co., Ltd. despite the additional report that the same major shareholder had reportedly lost 15 million shares (approximately 2.5% of WARRIX’s issued shares) that were used as collateral with a custodian.
Subsequent details regarding the transaction uncovered that the shares were sold at a nearly 21% discount on the average selling price in an over-the-counter deal to Hi-Tech Apparel. This transaction has obligated Mr. Wisan Wanasuksrisakul, WARRIX’s CEO and major shareholder, to pay income tax. The burden on tax income could have been avoided had the transaction occurred through the exchange.
The share price of WARRIX plummeted nearly 15% in the morning session on Monday and settled with a 12.6% decrease. The company later clarified in the afternoon that the shares sold to Hi-Tech Apparel via Mr. Wisan Wanasuksrisakul were transacted through the Thailand Securities Depository Co., Ltd. (TSD) and possibly served as collateral for an unpaid deal.
It is well-known in the market that there were several occasions that major shareholders and/or executives in listed companies used the company’s stocks as collateral for informal debt with High Networth Investors based on Loan to Value (LTV).
In addition to the shares used as collateral with the custodian, there were 15 million shares missing, which Mr. Wisan claimed were not part of a loan default. It was mentioned that Mr. Wisan Wanasuksrisakul has terminated the loan agreement and initiated legal proceedings to locate the missing shares and compel the custodian to return all shares deposited as collateral.
The uncertainty surrounding the major shareholder’s liquidity concerns and the potential for a forced sell has raised unpleasant sentiment among investors.