The Shipbuilding Industry Corporation (SBIC) is asking the Government for a special mechanism to deal with debts and negative equities of its subsidiaries before equitisation in the next 20 months.
SBIC’s Chairman Nguyen Ngoc Su made the revelation at a recent training workshop on equitisation. Most of the SBIC subsidiaries are suffering cumulative losses and grand negative equities.
“Currently, the key challenge is that big negative equities are at a complete standstill during the debt restructuring processes. It is mandatory for companies to turn equities into a positive status before equitising,” Su pointed out.
Accordingly, SBIC expects the Government to allow its subsidiaries to transfer debts to the mother corporation. Debt compensation will be provisionally made by revenues from initial public offerings (IPOs).
If IPOs fail to settle the debts, SBIC will seek the government’s continued support throughout the debt restructuring and loss compensating process.
SBIC, formally known as Vinashin, intends to privatise four one-member limited companies, such as Vinashin Corrugated Iron Company, Chan May Port, Ha Long, and Cam Ranh shipyards in 2014.
Five others slated to go public next year are Thinh Long, Sai Gon Shipbuilding and Marine Industry Company, Sai Gon Shipbuilding Industry Company, Bach Dang, and Pha Rung shipbuilding companies.
In Viet Nam, IPO and listing are separate processes.
SBIC has completed its first phase of the restructuring process. In the second phase, the government has permitted the restructuring of debts including the Government-guaranteed debt, debt from the official development assistance, and the amount lent to Vinashin.
Therefore, SBIC has VND21 trillion (US$1 billion) of domestic debt and about $35 million of foreign debts.
In October last year, Viet Nam listed Government-guaranteed bonds at the Singapore Stock Exchange in a bid to salvage the troubled, debt-laden Vinashin in repaying its creditors.
The move was aimed to help the State-run Vinashin cover a foreign loan worth $600 million, which was considered crucial for the group to repay the foreign debts and enable it to accelerate the much-needed restructuring of the corporation.
The bonds will be issued for 12-year terms with an annual interest rate of 1 per cent.
The restructuring of Vinashin was ordered in 2010 after government inspectors uncovered the group’s financial malpractices. By the end of 2009, the company was neck deep in debts amounting to more than VND86.7 trillion or $4.1 billion.