The Ministry of Construction suggests the State retain a controlling stake in Song Da Corporation after its equitisation given the company’s large-scale business operations.

Song Da Corporation is the largest hydropower construction firm in VN with a market share of 85 per cent. The company plans to expand hydropower projects to Laos and Cambodia in the future.

Founded in 1960, the company also focuses on infrastructure, transport engineering, civil industrial works, installation of power transmission lines and sub stations at industrial zones and urban areas.

In the equitisation plan designed for the company, which was submitted to the Government, the Ministry of Construction has proposed the State hold 51 per cent of Song Da Corporation’s capital after equitisation and reduce it to 36 per cent by 2020.

“The gradual reduction in the State’s holdings is designed to ensure the company’s business stability as well as keep in line with the view of restructuring the construction industry as approved by the Prime Minister,” the ministry said.

According to the company’s financial statement by the end of 2015, its equity capital had reached VNĐ2.65 trillion (US$118.6 million), but liabilities amounted to VNĐ10.2 trillion with the debt/equity ratio of over 3.8 times.

The ministry has proposed to raise the construction firm’s charter capital to VNĐ4.5 trillion to bring the debt ratio to a more reasonable level as well as guarantee its dividend payment of 3 per cent in the years after equitisation.

Song Da Corporation is expected to issue 450 million shares at the face value of VNĐ10,000 per share, with the State holding 51 per cent, strategic investors being offered 30 per cent, and 18.82 per cent to be auctioned in its initial public offering. The remaining shares will be sold to the company’s employees.

As for strategic investors, the selection criteria specify that the candidates have to register to buy at least 5 per cent of the company’s charter capital, equivalent to about VNĐ225 billion. In addition, prospective investors must have experience and capacity in the construction, electricity and real estate sectors.

It is important that strategic investors must have a total asset value of at least VNĐ1 trillion as of 2015 and an equity capital of VNĐ300 billion. The candidates must operate in profit and be without bad debts.

Song Da Corporation expects to earn VND2.9 trillion in revenue and VNĐ160 billion in pre-tax profits in 2016 after sales.

Song Da planned to make its initial public offering in July 2016 but it was forced to delay due to the complexity of evaluating the company’s value.

The Government Office has sent documents to the ministries of Finance,  and Planning and Investment, and the State Audit Office of Vietnam to collect opinions on this equitisation plan. 

VNS