An export receivables-backed securitization in Thailand has ended unhappily for the originator, after its funding was suddenly cut short by the arranger which also invested in the transaction.

Wongpaitoon Group Public Co. announced that Daiwa Financial Corp. had exercised a put option on a $15 million export receivables securitization Daiwa had arranged for the company in 1998.

As a result, Wongpaitoon is facing tight financial liquidity and must renegotiate with all its creditors to reschedule debt repayments, said its director Charnsak Wongpaitoonpiya in a letter to the Stock Exchange of Thailand.

Though $15 million is normally small change in cross-border ABS, it was money urgently needed by Wongpaitoon, which is struggling to repay debt to numerous creditors. "Basically what it means is that Daiwa wants their money back in one lump sum. It affects our cashflow and liquidity immediately. It's not a small amount for us," said a company finance officer in Bangkok.

Daiwa's decision to exercise the option was the result of its exit from the international structured finance business last year. Though Wongpaitoon had been verbally warned that Daiwa would exercise the option, it still came as an unpleasant surprise. "Since we didn't receive anything in writing, we didn't think they would do it. We thought they would stick with us until 2003" when the deal matured, he said.

However, help may be on the way from ING Barings, to where many of Daiwa's Asian staff have migrated. "Basically, ING has offered to help by providing the same kind of financing. But they said that they would only pay half of the original amount, and reserve the right to exercise the put in 12 months' time. We are still negotiating," he said. ING bankers declined to comment on the potential deal.

Wongpaitoon, a clothing and footwear concern, is a major producer of sneakers for Reebok International. The deal was one of the very few securitizations to emerge from Thailand after the 1997 economic crisis, and Thai officials had praised it as useful financing method for domestic exporters.

But as Thailand has hardly been a hotbed of global ABS in the past two years, Wongpaitoon's woes will have negligible effect on potential ABS issuance. "It's more of an unlucky break for Wongpaitoon. Most of the potential for Thai ABS issuance is based onshore," noted one local ABS banker.

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