1. What is BAM’s business? And how’s the investment policy?

Our core business is to acquire and manage distressed assets from financial institutions in Thailand, including Non-Performing Loans (NPLs), collateralized mainly by real estate-related assets and Non-Performing Assets (NPAs), primarily consists of real estate assets.

Our investment policy is to purchase no less than 110% of cost reduction each year, subject to economic condition, market condition, market competition, and liquidity. BAM has an investment philosophy in determining the quality of debt and collateral underlying NPLs and the investment grade of NPAs.

NPLs are bad debts in which the borrowers of financial situations; i.e. bank and other asset management company, could not repay the agreed installments of interest and principal for more than 3 months.

Our NPLs are mostly collateralized by real estate properties, secured by a first priority mortgage, and we manage NPLs through debt restructuring negotiations by considering debtors’ ability to repay and their underlying collaterals to reach appropriate settlement for each debtor. However, if negotiations could not be settled, BAM will proceed with lawsuit in order to receive the payment by foreclosing the underlying collaterals through the Legal Execution Department (LED)’s public auction.

In addition, we recorded NPLs as Loans purchased of receivables at cost of purchase or transfer acceptance.

NPAs are second-hand real estate properties, whereas BAM has ownership rights over the properties through restructuring negotiations (debtors transfer their properties for debt settlement), auctioning from the LED’s public auction, and direct purchasing from financial institutions.

We manage NPAs by selling the properties in ‘as is’ condition or if maintenance or renovation is required, BAM will renovate or repair such NPAs prior the sale and disposal process. Also, buyer may purchase our NPAs in cash or installment payment program.

BAM recorded NPAs at price upon transfer (cost of purchase) or cost of purchase with related expenses (if any) from the LED or other financial institutions.

The public auction is the consequence of legal action to bring the debtor to settle his debt. When the creditor sues the debtor to comply with the loan agreement, the court has made a judgment to the debtor to repay the debt, and if the debtor does not respond with the judgment, the creditor may request the court to grant an execution warrant for the Enforcement Officer, under the Legal Execution Department (LED), to seize the collateral underlying NPLs for public auction in order to repay to creditors.

For BAM, selling the underlying collateral through LED’s public auction is one of several means of NPLs management, and if the debt can be settled before the lawsuit or before the execution to seize the underlying collateral, this would be beneficial to the debtor as it could reduce the cost of litigation and seizure’s withdrawal.

The accrued income from auction sale is recorded on financial statement when the LED has auctioned and sold the collateral underlying NPLs through public auction and the buyer already places the full amount of payment at LED (Buyer may request time extension on fund placing up to 105 days from the knock-off date at auction.).

After the buyer paid the full amount of price, the LED will make a statement of revenue-expense to all stakeholders. The payment shall be made to creditor if there is no further dispute against the statement and the remaining will be returned to the debtor (if any).

The Company has adopted TFRS9 since January 1, 2020 which mostly has a matter effect on recognition of interest income from loans purchased of receivables. It changed from Cash basis to Accrual Basis, leading to the record of accrued interest receivable and Expected credit losses in accordance to present the Company’s performance.