VietNamNet Bridge - As of December 312015, Hoang Anh Gia Lai Joint Stock Company’s (HAGL) total debt amounted to VND27,099 billion, up 50% compared to VND18,126 billion of debt in 2014, reported Zing news.

HAGL boss Doan Nguyen Duc.

According to the audited consolidated financial statement, in 2015 HAGL obtained only VND502 billion of net profit, down 65% compared to 2014.

The cause of poor business results of HAGL was mainly because of the stumbling of rubber latex prices, which was sometimes below the cost price of $1,300 per ton compared with $5,500 per ton in the golden time.

HAGL currently has VND27,099 billion of credit loans and bonds, including VND8,297 billion of short-term loans that will be due in 2016 and VND18,801 billion of long-term loans.

In addition, the auditor Ernst & Young Vietnam noted that HAGL violated some terms of the bond loans.

The bond loan debts accounted for over 50% of HAGL’s loans, including VND1,100 billion of convertible bonds, VND1,130 billion of swap bonds, VND300 billion of bonds with detachable warrants and VND11,564 billion of normal domestic bonds.

Bond issuance is a form of credit grant which is rapid and easy but it poses potential risks for bondholders if they cannot manage or supervise the capital usage activities of the unit of issuance.

Currently, the Bank for Investment and Development of Vietnam (BIDV) is the largest creditor of HAGL with VND10,715 billion, including conventional credit and bond issuance arrangements.

The second largest creditor of HAGL is the Import Export Joint Stock Bank of Vietnam (Eximbank) with a total amount of VND3,955 billion, consisting of VND3,155 billion of long-term loans and VND800 billion of bonds.

The Vietnam Prosperity Commercial Joint Stock Bank (VP Bank) is the third largest creditor of HAGL with VND2,800 billion of loans in the form of bonds.

The other major creditors are the Laos - Vietnam Venture Bank with VND2,250 billion and the HCM City Development Bank (HD Bank) with VND2,236 billion, including VND1,386 billion of credit loans and VND850 billion of bonds.

Some other creditors by December 31st 2015 Sacombank (VND1,208 billion), North Asia Bank (VND820 billion), Vietnam Mass Commercial Bank (VND300 billion), Vietnam Capital Joint Stock Commercial Bank (VND240 billion) and TP Bank (VND200 billion).

In addition, a foreign partner, Northebrooks Investment (a member of Temasek, Singapore)currently owns VND1,100 billion of convertible bonds and VND1,130 billion swap bond in HAGL. Total loans in the form of bond issuance of HAGL in Northebrooks Investment is VND2,230 billion, with maturity in 2017.

Because of the loans of members of the banking system in HAGL, equal to the total assets of a small-sized joint stock commercial bank, in late March 2016 banks met to discuss the restructuring of debt for HAGL.

Talking to the press about the incident, HAGL Chairman Doan Nguyen Duc said HAGL was negotiating with its creditors to restructure the loans.

US$1 = VND22,300

Nam Nguyen