The Debt and Asset Trading Corporation (DATC) and debt-ridden Vinashin held a media meeting on Thursday to announce their plan to issue government-backed international bonds in a bid to pull the state-run shipbuilder away from the brink of bankruptcy.
The plan intends to restructure the massive US$600 million loan debt of Vinashin, which almost collapsed in 2010 after it accumulated an enormous debt of over $4.11 billion.
Specifically, DATC will issue the global depositary receipt (GDR), guaranteed by the Vietnamese government, via the Credit Suisse banks to the creditors of Vinashin.
A GDR is a bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares, but are offered for sale globally through various branches of the bank.
Earlier on August 5, all of the lenders attended a creditor meeting in Singapore to approve Vinashin’s proposal to restructure its debts.
Accordingly, 64.7 percent of creditors, who account for 79.34 percent of the debts, approved the restructuring plan via GDRs.
All liabilities of Vinashin will be converted into GDRs, the interest rate of which is 1 percent a year, with a term of 12 years.
DATC Pham Thanh Quang, who is tasked with handling Vinashin’s bad debts, admitted to Tuoi Tre that “rescuing a dying company is a tough job”.
“Besides handling bad debts, we also have to pump more money into the company and restructure its administrative operation and management,” he said.
Asked how many of the 200 subsidiaries of Vinashin will be saved from the plan, Quang said the government will focus on maintaining the government capital at around 70 companies where it holds a 100 percent stake.
“As for the some 70 businesses that have the Vinashin brand in their company names, the task is much easier: we just let them restructure on their own,” he added.
But he noted that it will not be so costly to handle the shipbuilder’s bad debts.
DATC will first use its own capital to purchase debts from Vinashin, while the government will also attempt to have some of its loans extended or renewed at lower interest rates.
Quang said it is not a risky move to buy debts from Vinashin, since some lenders are willing to sell at only 20 to 30 percent of the real loan values as they want their money back to start other investments.
“It will take at least three years for positive signs to emerge from this restructuring,” he said.
The DATC chief said there will be many ways to recoup the money it pays to buy Vinashin’s debts.
Among these is to find buyers for the ships Vinashin has already finished, with the solution of selling at an acceptable loss.
“It’s still better than leaving the ships untouched,” he explained, while emphasizing the importance of having a fresh, ambitious workforce to revitalize the company.
Quang expressed his hope that the loan restructuring at Vinashin subsidiaries where the government holds a 100 percent stake can be completed by the end of this year.
“The whole plan is expected to finish by the end of next year,” he added.