The debt restructuring plan is expected to help recover Vinashin. Photo tinmoi.vn
HA NOI (Biz Hub) — Vietnam Debt and Asset Trading Corporation (DATC) will issue US$600 million of bonds overseas guaranteed by the Vietnamese Government to restructure the debts of Vietnam Ship Building Group (Vinashin).
According to Vinashin, the debts will be exchanged for bonds issued by the DATC. The 12-year maturity bonds will be issued with an annual interest rate of 1 percent, paying off principal and interest at maturity.
The decision comes after lengthy negotiations between Vinashin and its foreign debt owners. Vinashin has elaborated a successful solution of debt restructuring with debt owners’ agreement.
Vinashin’s financial malpractice was discovered after Government inspectors conducted an investigation into its business operations from July-November 2010. At the end of 2009, the group was more than VND86.7 trillion ($4.1 billion) in debt.
In 2010, Prime Minister Nguyen Tan Dung approved a three year restructuring plan (2011-13).
After the state-owned group defaulted on loans for three years, US hedge fund Elliott Advisors LP and the UK’s Bluecrest Mercatile sued the Vietnamese shipbuilder in the UK High Court in 2011.
In a meeting with Vinashin’s debt owners in Singapore in August, Vinashin reached credit restructuring agreements with 64.7 per cent of its debt owners, who hold 79.3 per cent of the total debt.
In September, the UK High Court accepted Vinashin’s restructuring plan with approval from a majority percentage from creditors.
The group has restructured 43 of its 216 member companies so far, withdrawing capital from 14 companies, closing 14, transferring capital to 12 companies and giving its property rights to three enterprises.