FINANCE and banking authorities have decided to allow the 16 ailing finance companies, which have received a combined Bt150 billion in government liquidity support, to re-open their doors to business, with restrictions, on Monday. The firms will then have 60 days in which to submit a final accounting of their assets and liabilities for merger and acquisition purposes.

The joint announcement of the Finance Ministry and the Bank of Thailand points to another time-consuming effort, if not a delay, in tackling the ongoing financial crisis which is crippling the Thai economy and undermining the confidence of foreign investors.

The ailing finance companies with securities businesses will be restricted to only clearing up margin loans on behalf of their clients, which will include the transferring of loans to other securities firms if asked to do so by the clients. The firms could also accept money, in the form of investment, from clients to pay for new share subscriptions.

The firms are prohibited from taking new deposits but will be allowed to extend the maturity of existing deposits. New loan extensions will not be allowed, nor can any assets be transferred into or out of the firms' balance sheets. The authorities have found that most of the rescue plans submitted by the firms, which were ordered to shut down a month ago, are vague, particularly with regard to information on their new partners.

Of the 16 companies, two have expressed their intention to be acquired by Krungthai Thanakit Finance & Securities Plc, two to be acquired by other core companies which are making preparations to become banks, and the remaining 12 to be rescued by new partners. The authorities have agreed to require that independent valuers confirm the assets and liabilities of the ailing firms, an enterprise that must also take place within 60 days from their reopening.

The ailing firms are: Finance One, Finance House or Sub Thamrong, Thai Fuji Finance & Securities, Thana One Finance & Securities, GCN Finance, General Finance & Securities, United Finance, Royal International, Thai Financial Trust, Dynamic Eastern Finance Thailand (1991), Prime Finance, CMIC Finance & Securities, ITF Finance & Securities, Country Finance & Securities, CL Sahaviriya Finance & Securities, and Bangkok Metropolitan Trust.

The announcement said the two firms that have requested they be acquired by Krungthai Thanakit will be further considered by the finance minister. Over the next seven days the ailing firms that requested to be taken over by other core finance companies or new partners will have to appoint independent valuers to assess their assets and liabilities. The valuers must have the approval of the authorities.

The boards of directors must approve the merger process within 10 days. Within 15 days, these ailing firms must submit their new partners' written legal obligations to the authorities for consideration. The announcement said the 16 ailing firms will have to negotiate directly with their creditors by either debt rescheduling, debt reduction or conversion of debts into equity. Both local and foreign creditors will have to be treated equally by the ailing firms, including the Financial Institutions Development Fund. Those holding promissory notes of the 16 firms will get their money back under differing conditions, according to the amount involved. For promissory notes under Bt1 million, repayment, plus interest, will be made within six months. For promissory notes of between Bt1 million and Bt10 million, repayment, plus interest, will be completed within three years. For notes of more than Bt10 million, repayment, plus interest, will be made within five years.