While Shipbuilding Industry Corporation (SBIC), the successor of the debt-laden Vinashin, is about to undergo the second debt restructuring phase, Vietnam National Shipping Lines (Vinalines) is struggling to settle debts previously.
The financial restructuring at Vinalines has not made considerable progress. Total debts it owed to banks in the 2009-2013 period amounted to over VND11 trillion, and much of the sum has been rescheduled or frozen.
To implement its equitization plan early next year as scheduled, Vinalines must not only restructure its finance but also address its half-done projects and dissolve loss-making enterprises.
Last week, Vinalines sent documents to Vietnam Development Bank (VDB) and SBIC to inform that it had officially suspended building 11 ships, part of the program to take over 20 unfinished ships from Vinashin, with five ships belonging to Vinalines itself and the remainder belonging to its subsidiaries.
Vinalines sent the announcement to VDB and SBIC as the program to build 20 new ships invested by Vinashin was financed by VDB. When Vinashin was restructured in 2010, the Government decided to transfer some enterprises and unfinished projects to Vinalines and Vietnam National Oil and Gas Group.
As a result, Vinalines had to replace Vinashin as the investor of this shipbuilding program while some ship owners canceled their orders.
After finishing building the first nine ships, Vinalines found itself unable to keep on with the 11 remaining ships as the transport market has declined.
In fact, the program was suspended a long time ago due to financial constraints of Vinalines and tough market conditions.
However, the debt amount shouldered by Vinalines due to Vinashin’s shipbuilding contracts under this program is huge, pushing up total debts Vinalines owed to VDB as of last year to over VND2.08 trillion, including principal and interest.
There were many loans with an interest rate of up to 10% per year but the project could not be completed and thus cannot bring in money to help Vinalines pay its debts.
The Government has recently agreed on delaying Vinalines’ debts at VDB in two years (2013-2015) and writing off the interest accrued before this year. Nevertheless, due to difficulties encountered when negotiating on rescheduling debts with creditors, Vinalines had no choice but to request the Government to liquidate its assets to cut losses, including the aforementioned shipbuilding program.
While Vinalines is struggling, SBIC gets more support. After having VND11.539 trillion of principal restructured late last year with 70% of debts written off, it is going to undergo the second phase of similar debt restructuring with a debt amount of VND13.084 trillion.