VietNamNet Bridge – Vinalines will not have to pay a part of its bank loan interest under a government decision that aims to help the shipping corporation undergo equitization to restructure itself.

The government has agreed to several finance restructuring measures proposed by the Vietnam National Shipping Lines (Vinalines) to revive the corporation, which is on the verge of bankruptcy.

Vinalines has been told that it will be exempted from paying a part of the bank loan interest, which would help relieve its burden and become more attractive in the eyes of investors.

However, Vinalines seems to be less lucky than Vinashin (the Vietnam Shipbuilding Industry Group, now SBIC), which was freed from a part of its principal. Meanwhile, Vinalines will still have to pay the entire bank principal.

Prior to that, Vinalines had put forward many different measures to restructure its debts. It asked for permission to cut by 60-70 percent of its debt duties; sell assets to pay debts; convert bank loans into bank capital contributions to Vinalines after equitization; and freeze debts.

Vinalines’s finance report showed that by the end of 2013, Vinalines still owed banks VND11 trillion, much higher than its holding company’s stockholder equity of VND4.25 trillion.

However, the government has only accepted to write off the debts it owes to the Vietnam Development Bank (VDB), a state-owned investment bank specializing in providing preferential loans, accrued by December 31, 2013. It is still unclear how much the sum really is.

Meanwhile, the principal worth VND2 trillion would be frozen for two years from December 31, 2013 to December 31, 2015.

As for the debts to the other 23 credit institutions, Vinalines will have to negotiate with the creditors on the debt payment scheduling. It is highly possible that Vinalines would ask banks to freeze the debts for three years, until December 31, 2016.

The government has also asked commercial banks to consider giving debt remissions to Vinalines.

In addition, debt remissions stipulated by the government will be applied only to the Vinalines holding company, shipping firms and the firms in which Vinalines holds 100 percent of capital (which took losses in 2012 and 2013).

This means that preferential treatment will not be given to profitable ports, logistics subsidiaries and Vinashinlines, which is now awaiting bankruptcy declaration.

Even the enterprises in which Vinalines holds 51 percent of capital (or more) are not included on the list for debt restructuring.

The Ministry of Finance and the State Bank of Vietnam have been told to draw up a solution that would convert banks’ loans to Vinalines into government-guaranteed bonds.

However, the government will only come forward and guarantee the bonds if Vinalines can draw up a feasible implementation plan. To date, no such plan has been submitted.

As such, only the holding company and three other firms (dependent companies or 100 percent Vinalines-invested) will undergo restructuring.

The debts owed by the four companies which need to be restructured total about VND3-4 trillion.

VNN/TBKTSG