Vietnam's leading contractor Hoa Binh plans debt-to-equity swap with 96 creditors

Hoa Binh Construction Group (UPCoM: HBC) plans to issue 46.9 million shares to convert debt owed to 96 creditors into equity, as the company seeks to strengthen its balance sheet following several years of financial restructuring.

The proposal, disclosed in documents prepared for the company’s upcoming AGM, would allow Hoa Binh to settle approximately VND470 billion ($17.86 million) of liabilities through a debt-for-equity swap.

Under the plan, the builder will issue shares at VND10,000 ($0.38) each, a price negotiated directly with creditors and nearly double HBC’s average market price over the past 30 trading sessions.

The conversion price is also significantly above the company’s book value of VND5,638 ($0.21) per share based on its latest audited consolidated financial statements.

If approved, participating creditors will be subject to a one-year lock-up period following the issuance.

According to a creditor list disclosed by the company, construction equipment supplier Matec Construction Machinery JSC is expected to receive the largest share allotment, equivalent to more than 9.2 million shares. Other creditors are expected to receive allocations ranging from several thousand shares to roughly three million shares.

The debt conversion plan replaces a much larger capital-raising proposal approved by shareholders last year.

Hoa Binh had previously sought approval to issue up to 347 million shares to raise funds for repaying bank debt and outstanding obligations to subcontractors and suppliers. The firm’s board is now seeking shareholders’ nod to cancel the plan, citing unfavorable market conditions and changing funding needs.

The shift highlights the challenges facing listed companies attempting to raise equity amid weak market valuations. For Hoa Binh, the debt-to-equity swap has emerged as a more practical alternative amid weak equity valuations and ongoing pressure on the construction sector.

As of the end of Q1/2026, HBC’s total liabilities stood at approximately VND14.28 trillion ($542.34 million).

The proposed swap comes as Hoa Binh continues to recover from one of the most difficult periods in its history.

In the company’s latest annual report, chairman Le Viet Hai said Hoa Binh had moved beyond the phase of merely “struggling to survive” following the combined impact of the Covid-19 pandemic, disruptions in the domestic real estate market, and broader global economic uncertainty.

The company posted losses at VND1 trillion ($37.99 million) in both 2022 and 2023 before returning to profitability. Net profit rebounded to VND960 billion ($36.47 million) in 2024 and remained positive at VND251 billion ($9.54 million) in 2025.

At the start of 2026, Hoa Binh’s construction backlog stood at nearly VND10 trillion ($379.93 million).

Looking ahead, the company set an ambitious target of VND10 trillion in revenue this year, more than double 2025, while maintaining net profit at around VND250 billion ($9.5 million).

During Q1, Hoa Binh reported revenue of VND1.32 trillion ($50.23 million) and net profit of VND23 billion ($873,830).

HBC shares closed up 2.04% to VND5,000 ($0.19) each on Wednesday.