On 29 December 2022, the Board of Directors of SUSCO resolved to propose to the extraordinary general shareholders meeting to consider and approve a sale of ordinary shares and preferred shares of its subsidiary SDA to Sinopec (Hong Kong) Limited (Sinopec) in the proportion of 48 and 1 percent of the issued and paid-up shares, respectively at the price of US34 million dollars, representing 50 percent voting rights of the total sold shares.   

In this regard, IFA has an opinion that the SUSCO shareholders should not approve the proposed transaction this time due to inadequate conditions in the shareholder agreement whereby restrictions are placed on expansion of service stations in the future and new business opportunities for SUSCO. These conditions apply unilaterally to SUSCO, not the other counterparty, and include terms for the future sale of SDA shares of SUSCO wherein Sinopec must be granted tag-along rights. This results in reduced flexibility and adaptability in SUSCO’s future management. Furthermore, although the transaction price is reasonable, SUSCO incurs hidden costs arising from the transaction conditions, namely opportunity costs because SUSCO is prohibited from competing with the SDA Group, consequently impacting investments in new service stations. Additionally, there is the implicit value that SDA, an oil trader license holder under Section 7 of the Fuel Trade Act of 2000, has the opportunity to use the license to expand the oil trading business beyond the existing network. Therefore, the shareholders should consider this implicit value together with the value of the business as well. 

Nevertheless, the Board of Directors of SUSCO views that the transaction conditions are appropriate and do not limit opportunities for SUSCO’s business expansion. Additionally, SDA’s investment will not overlap with SUSCO’s current operations or anticipated future business activities. SUSCO holds a 51 percent stake (accounting for 50 percent voting rights) of the total SDA shares sold and has representatives holding half of the SDA directorship, thus allowing the SUSCO Board of Directors to jointly plan, control investments, and set business strategies for SDA. Moreover, in case of decision making on critical matters that may impact SDA’s business operations, the SUSCO Board of Directors will consider such matters before instructing SUSCO representatives to vote, aiming to protect SUSCO’s best interest. As for the value of SDA shares offered for sale, the SUSCO Board of Directors has taken into consideration the oil trader license under Section 7 of the Fuel Trade Act of 2000 as well as the intangible assets. SUSCO disclosed the opinions of the Board of Directors through the Electronic Listed Companies Information Disclosure System of the Stock Exchange of Thailand (SET) on 10 February 2023.

The proposed transaction above is a disposition of assets and, pursuant to Section 107 of the Public Limited Company Act of 1992, a sale or transfer of all or part of the company’s core business to other persons. Therefore, the shareholders’ approval is required with a vote of not less than three fourths of the votes of the attending shareholders with the voting rights, excluding those with a conflict of interest in this regard.   

The SEC, therefore, encourages the shareholders to thoroughly review information and exercise their rights to safeguard their interests. This includes making inquiries to the SUSCO management about various details to ensure comprehensive information for making voting decisions at the shareholders’ meeting.

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