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Concern over Vinawaco capital loss

The largest problem for the Việt Nam Waterway Construction Joint Stock Corporation (Vinawaco) is its losses and debts, which reached VNĐ138 billion (US$6.13 million).


Three years after an initial public offering (IPO), Việt Nam Waterway Construction Joint Stock Corporation (Vinawaco) has not transferred the State’s capital from the transport ministry to the State Capital Investment Corporation (SCIC).

The largest problem for the company is its losses and debts, which reached VNĐ138 billion (US$6.13 million), local media reported in August. The problem has stirred public concerns over the chance of the Government suffering losses when selling its stake in the company.

According to company chairman Ngô Văn Tuấn, the losses and debts included VNĐ66 billion worth of bank loans and VNĐ38.2 billion in construction costs for 25 unfinished projects that were launched before 2013.

The largest bank loan was the VNĐ53 billion borrowed from Vietcombank’s HCM City branch 22 years ago. The loan began at VNĐ12 billion and had generated VNĐ40 billion in interest after 22 years.

Tuấn said that the losses and debts were not covered in the company valuation when it prepared its IPO, thus, the actual numbers must be larger than the recorded figures.

“The State is holding 30 per cent of Vinawaco, equal to VNĐ109.8 billion. If those losses and debts are counted in the valuation, the State’s capital will be reduced to a negative VNĐ30.3 billion,” Tuấn said.

The situation has become worse for Vinawaco, as the company has been sued by its own shareholders, suppliers and partners, while its bank accounts have been frozen after being declared non-performing loans by local lenders, Vinawaco said in a statement sent to the transport ministry.

At the company’s annual shareholders meeting held in late July, Vinawaco reported VNĐ440 billion in revenue and only VNĐ1.8 billion in post-tax profits – the lowest in three years – resulting in a dividend payout rate for shareholders of only 0.6 per cent.

The company also reported that receivables and inefficient financial investments consumed 56 to 59 per cent of the total payables, while bank loans have tripled the firm’s owner-equity capital.

To sort out solutions for Vinawaco, the Ministry of Transport had asked the company to compile and submit a report on its debts and losses by September 30, Vietnam News Agency reported on Friday, citing deputy transport minister Nguyễn Văn Công.

The report must cover Vinawaco’s loans from Vietcombank’s HCM City branch and other businesses, such as Transport Investment Cooperation and Import and Export Joint Stock Company (Tracimexco), as well as the company’s receivables and long-term financial investments, he said.

The ministry will seek solutions to deal with the firm’s financial losses and debts, and seek charges against individuals and groups that had led to this situation, Công said. “The ministry will report any issues that are beyond its authorisation to the Prime Minister.”

Vinawaco was founded in 1982 and has been operating as a joint-stock company since June 2014. The company launched its IPO in late March 2014, selling nine million shares, offered at the IPO for an average VNĐ10,100 per share.

The transport ministry has remained a shareholder of the company on behalf of the Government with a 30 per cent stake, equal to VNĐ109.8 billion.