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Suvarnabhumi » King Power files 68 Billion Baht suit against Airports of Thailand

Sunday, July 20th, 2008

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King Power International Group filed two lawsuits against Airports of Thailand (AOT), demanding it pay 68 billion baht in damages plus interest for terminating its duty-free shop contracts at Suvarnabhumi, Phuket and Hat Yai airports. The two lawsuits were filed with the Civil Court by lawyer Bundit Siripant on behalf of King Power Suvarnabhumi Co and King Power Duty Free Co yesterday.

King Power Suvarnabhumi and King Power Duty Free Co demanded 20.8 billion baht and 48 billion baht, respectively plus 7.5% annual interest from Airports of Thailand.

According to the lawsuits, the group, through both companies, had operated duty-free shops at Don Mueang, Phuket and Hat Yai airports.

When it learned in 2004 that Airports of Thailand would operate Suvarnabhumi airport in place of Don Mueang, the group asked Airports of Thailand to let it move its duty-free shop businesses to the new airport and extend its duty-free shop contracts at all three airports for 10 years. The group proposed paying 15 billion baht to Airports of Thailand in exchange for the agreement.

In response, Airports of Thailand organised a bidding contest to let other operators vie for the contracts. Finally, Airports of Thailand selected King Power for the group’s long and award-winning experiences and huge revolving funds, according to its lawsuits.

As the opening of Suvarnabhumi airport was postponed, Airports of Thailand later extended the contracts further to 2017. King Power then offered to add another 20% of the 15-billion-baht returns to Airports of Thailand.

However, Airports of Thailand in March this year nullified King Power‘s contracts that cover its right to commercial space at Suvarnabhumi, Phuket and Hat Yai airports. Airports of Thailand reasoned that King Power’s investments at the airports exceeded one billion baht and investment of such magnitude should have undergone scrutiny via the Public-Private Joint Venture Act.

King Power explained that Airports of Thailand‘s selection committee had evaluated bids and picked the group as the winner. Subsequently, the group invested considerably in hiring contractors, consultancy firms and personnel and buying products worldwide for over three years for its shops at the airports. The investment depended on loans which led to interest burdens for the group.

King Power said the sum demanded would compensate its for its past investments at Suvarnabhumi, Phuket and Hat Yai airports and also lost income opportunities. It also demanded Airports of Thailand return its guarantee for the nullified duty-free shop contract.

The Civil Court accepted the lawsuits and set a witness hearing at 9am for September 24, 2007. An Airports of Thailand officer said that Airports of Thailand would seek advice from the Office of the Attorney-General.

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