Contractor Hoa Binh to increase charter capital, swap debts

Shareholders of Hoa Binh Construction Group approved Tuesday the issue of 274 million shares at VND12,000 ($0.49) per share towards increasing its charter capital and swapping debts.

While 54 million shares will be used for debt swaps with suppliers, subcontractors and manufacturers, the remaining 220 million shares will be offered via private placement.

All proceeds from the share issuance will be used to supplement business capital and pay existing debts. The share issuance is expected to be done in 2023-2024 after the State Securities Commission’s approval.

A one-year transfer restriction from the date of issuance will apply to the shares issued for debt swaps. The privately placed shares will carry a three-year and one-year transfer restriction for strategic investors and professional securities investors, respectively.

At the company’s second extraordinary general meeting of shareholders in 2023 Tuesday, Hoa Binh chairman Le Viet Hai said that the company had signed an agreement in principle with a global investment and development group for strategic cooperation and support for international expansion. The two sides were discussing the details and striving to complete the share issuance by the end of this year, he added.

Facing a “mountain of difficulties and challenges,” Hoa Binh has come up with comprehensive restructuring solutions with top priority given to financial restructuring and share issuance to increase capital and reduce debt repayment pressure, Hai noted.

According to the chairman, as of October 16, nearly 100 suppliers and subcontractors had agreed to sign debt-for-share exchange agreements with a total value of VND400 billion ($16.3 million).

Hai further said that in the fourth quarter of 2023, the company will collect more than VND2.8 trillion ($114.1 million) that it is owed by major real estate developers like Novaland, Sun Group, Gamuda Land, Sunshine, Vingroup, and Ecopark.

Earlier, Hoa Binh had recovered about VND304 billion ($12.43 million) from real estate developer FLC Group through two lawsuits it won in 2020. This included more than VND270 billion ($11.04 million) in cash and VND34 billion ($1.39 million) in real estate. The debts were related to the FLC Sam Son ecological urban area project in the central province of Thanh Hoa.

On October 12, the People's Court of Quy Nhon town in the south-central province of Binh Dinh accepted all of Hoa Binh’s requests, forcing Pro Science Co., Ltd., the investor in a hotel project of the same name, to pay more than VND100 billion ($4.09 million) to Hoa Binh.

A day earlier, the VIAC also ruled that the Construction & Urban Development JSC must pay Hoa Binh nearly VND162 billion ($6.62 million).

In January 2023, Hoa Binh won a lawsuit against Vietnamese real estate developer Thanh Do related to the construction of a condotel project in Danang city on the central coast.

At the first annual general shareholder meeting of the company in May, chairman Hai had said that among a total of 21 lawsuits regarding late payments, Hoa Binh had won 10.

According to vice chairman Le Viet Hieu, the firm has collected about half of more than VND1 trillion ($40.9 million) in overdue debts recognized by judgment enforcement agencies.

Hoa Binh Construction Corp. is listed on the Ho Chi Minh Stock Exchange (HoSE) as HBC, which closed the Wednesday session at VND8,150 ($0.33).