Vietnam's leading developer Novaland plans share issuance for debt conversion

Novaland, a major real estate developer in Vietnam, plans to issue additional shares to convert debt into shares for some major shareholders who have lent the company in times of financial woes.

Issuing shares for debt conversion

According to Novaland (HoSE: NVL), its board of directors plans to seek an AGM approval to implement an issuance of shares for debt conversion.

Specifically, Novaland will issue shares to swap debts for some major shareholders who sold collateral to repay the company's debts in loans and bonds.

The major shareholders are NovaGroup and Diamond Properties which are both related to Bui Thanh Nhon, chairman of the board of directors.

According to Novaland's leaders, during Novaland's most difficult period, the major shareholders were committed to paying off mature debts for it when necessary, helping the company to maintain its continuous operations.

According to the signed agreements, in the three years 2022-2024, shares mortgaged by these shareholders to fulfil Novaland's debt obligations were sold to pay off the company's debts. This means Novaland has recorded debt obligations with these shareholders in its financial statements.

At the end of 2021, when Novaland had not yet encountered financial difficulties, a group of shareholders related to chairman Bui Thanh Nhon took control of the company by owning more than a 61.4% stake.

In early 2022, the price of Novaland's shares began to decrease, given a series of unfavorable market developments. Novaland began to fall into a crisis period, with NVL shares plummeting.

During this period, to "save" Novaland, the group of shareholders related to Nhon lent the company shares to sell to pay off debts, and at the same time proactively sold a large amount of NVL shares to support the debt restructuring for the company, leading to a continuous decrease in their aggregate ownership ratio, from 60.8% in June 2022 to 38.7% in December 2024.

Most recently, five shareholders related to Nhon have also registered to sell nearly 19 million NVL shares to balance their investment portfolio and support debt restructuring, as well as due to "personal reasons".

The transaction is expected to be carried out by order matching and put-through from May 16 to June 13, 2025. If successful, the total ownership ratio of Novaland's major shareholders will decrease to 37.4%.

Therefore, Novaland's leaders said that the current plan to issue additional shares is based on the reimbursement needs of the major shareholders.

Commitment to ensure fairness for all investors

The detailed plan has not been announced, however, the issuance of shares for debt conversion will dilute shares, affecting the interests of current shareholders.

Novaland's management affirms that it will always be transparent and ensure fairness for all investors. Novaland, together with major shareholders, is committed to achieving the firm's business targets to ensure the interests of shareholders and all related parties.

According to the roadmap, Novaland's leaders expect to complete the restructuring by the end of 2026 and return to the growth and development trajectory from 2027.

The company will strive to fulfill all debt obligations to customers, investors, shareholders, bondholders, partners, and related parties from end-2026-2027.

According to another plan approved at the AGM, Novaland also wants to issue up to 350 million individual shares to 20 professional investors at an issuance price of VND10,000/share.

At the same time, the company wants to issue 97.5 million shares to employees (ESOP) to enhance the company's connection with its staff and express its recognition of their efforts and contributions.

NVL shares recorded a good recovery from the VND8,100/share range on April 9 to VND12,600/share in early May. However, with many negative news such as the first-quarter loss, major shareholders and insiders' divestments, and not having yet fulfilled debt obligations, the price has adjusted to hover around VND12,200/share.

On the Ho Chi Minh Stock Exchange, NVL shares closed Monday at VND12,050 ($0.46).