Novaland (NVL) has announced that it is discussing with the group of bondholders related to the international convertible bond lot worth $300 million, being listed in Singapore.

Because of its liquidity problems, Novaland cannot implement the debt payment obligation of $7.8 million worth of bond interest. The realtor is negotiating with the group of bondholders about the restructuring plan suited to Novaland’s capability and its business recovery process.

The negotiations are conducted with the consultancy of international consultancy firms, including Deloitte, Sidley Austin LLP and YKVN.

In the context of limited resources, Novaland has pledged to make every effort to negotiate and resolve the problem in the spirit of inquiry with the desire to find optimal solutions to ensure the rights of bondholders.

Novaland is among the real estate developers that have issued bonds in bulk. The total short-term bond nominal value had been reported at VND14.132 trillion at the end of the second quarter (all the bonds were issued privately to domestic securities companies and commercial banks). 

Meanwhile, the total long-term nominal value has increased rapidly, reaching VND28.993 trillion. This includes a lot of international bonds with the total equivalent value at VND7.092 trillion, issued to foreign partners. The issuance was arranged by Credit Suisse AG Singaporean branch, which also acts as the distribution agent.

The lot of international bonds is expected to mature on July 16, 2026. The interest rate Novaland has to pay to bondholders is 5.25 percent per annum, with the payment made every six months.

These are unsecured bonds, but they can be converted into NVL shares with the initial conversion rate of VND135,700 per share, or 33,916 shares/bonds, and will be adjusted in accordance with market prices.

Prior to that, Business Wire reported that Ad Hoc Group, the representative of the group of bondholders holding 75 percent of the total bond value of $300 million, will take a new move if Novaland doesn’t negotiate debt restructuring in good faith.

Bank of NY Mellon (USA) also released notices, including the latest on July 17 on the payment of bond interests due on July 16, 2023. Though the parties have reached a consensus on debt payment deadline extension, the group said it has not received cooperation. 

Novaland said in the current difficult macroeconomic conditions, its revenue sources and the capability to mobilize new capital have been adversely affected. The cash accounts at projects are put under strict supervision by the banks to be sure that the capital is used for the project development.

Manh Ha