TPI borrowed $3.7B in dollars to build an empire — then the baht collapsed

Thai Petrochemical Industry was founded by Prachai Leophairatana, building on businesses his grandfather started after World War II. By 1994, TPI had become Southeast Asia's first fully integrated petrochemical company, with investments in a refinery, a 100-MW power plant, a wharf, a cement factory, and a chain of gas stations. The strategy was built on economies of scale — but it was financed almost entirely with short-term, unhedged dollar-denominated debt.

When the Asian Financial Crisis hit Thailand in July 1997, the baht collapsed from about 25 to 56 per US dollar. TPI's $3.5–3.7 billion in foreign debt effectively doubled overnight. In August 1997, TPI stopped making payments on principal and interest. Prachai refused to pay, arguing that Thai borrowers should not bear the brunt of the currency depreciation. The company owed 148 creditors, led by Bangkok Bank (over $600 million), along with the IFC, Citibank, and Bank of America.

Thailand established a new central bankruptcy court in June 1999 to handle the wave of corporate defaults. The court ruled TPI insolvent and ordered the company taken from Prachai's control. Creditors appointed Ferrier Hodgson's Effective Planners to restructure the debt. The plan converted $756 million in unpaid interest into a 75% stake, reducing the Leophairatana family ownership from 60% to 15%. The restructuring aimed to raise $200 million selling the power plant, water facility, and part of the cement factory, and expected TPI to retire $900 million in debt over four years.

Prachai fought the restructuring at every turn. He refused to open the company's books, sued Ferrier Hodgson for embezzlement (over billing for bodyguards), accused Finance Minister Tarrin Nimmanahaeminda of conspiring with the IMF, and rallied 3,000 employees against the acting CEO. The case became one of Thailand's longest and most contentious bankruptcy proceedings. By 2008, TPI Polene still had Bt8.04 billion in liabilities under restructuring, and Prachai was convicted of stock manipulation with a Bt6.9 billion fine — the restructuring took over a decade to complete.

The restructuring converted $756M in unpaid interest into a 75% stake, cutting the founder's family from 60% to 15% ownership, but he fought it for over a decade.

TPI financed a $3.7B integrated petrochemical complex almost entirely with short-term, unhedged dollar debt — when the baht halved, the debt doubled and the company had no natural hedge.

Prachai stopped payments in August 1997 and refused to negotiate for years, turning a solvency crisis into a decade-long legal war that destroyed creditor confidence and prolonged the restructuring.

The company never earned a profit before the crisis — the entire expansion was built on the assumption that cheap dollar loans could be rolled over indefinitely.

Prachai sued the restructuring firm, accused the finance minister of conspiracy, and rallied employees against the acting CEO — fighting every step of a process that was already inevitable.

When your entire balance sheet is in a currency you do not earn, you are not a petrochemical company — you are a bet on the exchange rate.

TPI was renamed TPI Polene and eventually emerged from restructuring as Thailand's third-largest cement manufacturer, also producing petrochemicals. The Leophairatana family's stake was diluted from 60% to 15%. Prachai Leophairatana became a senator and an outspoken critic of Thaksin Shinawatra, funding the People's Alliance for Democracy and joining the Pracharaj Party. In February 2008, he was convicted of stock manipulation and fined Bt6.9 billion. The TPI case remains Thailand's largest and longest corporate debt restructuring.