Siam Cement Group (SCG), Thailand’s largest industrial conglomerate, was hit hard by the 1997 Asian financial crisis. Like most Thai companies at that time, SCG had not sufficiently hedged against foreign exchange fluctuations (the Thai baht lost half its value in a few months) and was highly leveraged. “After the Asian crisis, the balance sheet of the parent company looked so bad because we had acquired a huge foreign debt,” says Chaovalit Ekabut, SCG’s current chief financial officer.
In an effort to diversify financing away from only banks, the group offered debentures on one of its more profitable subsidiaries, instead of on the shaken parent company. “We were actually the first Thai corporation to issue debentures, just one or two years after the crisis,” says Mr Ekabut.