VietNamNet Bridge – Solutions to Vinalines’ debt settlement will not occur unless the government agrees to amend a series of regulations.

Deciding that it should not follow Vinashin’s move (a shipbuilder burdened with debt), to issue rollover shares with the government’s guarantee, the Vietnam National Shipping Lines (Vinalines) wants to go its own way to settle its debts.

First, the Ministry of Finance’s Debt and Asset Trade Corporation (DATC) would negotiate with banks – the creditors of Vinalines – to buy VND10 trillion worth of Vinalines’ debts (Vinalines cannot buy its debts back directly from the banks).

After that, Vinalines would get its debts back from DATC at the prices DATC pays to banks and pay DATC the debt management fee.

Second, Vinalines wants the government to allow it to retain the receipts from the ports’ IPOs (initial public offering) to increase its chartered capital and to pay debt to DATC. It expects to earn VND653 billion from the IPOs.

Third, it wants the government to allow it to withdraw capital from the ports of Hai Phong, Nghe Tinh, Da Nang and Cam Ranh, to reduce its ownership ratio in the ports to 51 percent. If so, it would get another sum of VND2 trillion to restructure the debts.

Vinalines has also proposed that the government and the Asian Development Bank (ADB) allow it to join the state-owned enterprise reform program, which provides preferential loans of up to 25 years with an eight-year grace period.

Analysts commented that the solutions suggested by Vinalines have proven to be unfeasible because it would violate many currently applied regulations.

If the government gives a favor to Vinalines, it would create a precedent for this, and other state-owned corporations would also demand the same.

The current regulations do not allow DATC to buy debts in the way suggested by Vinalines. In general, DATC buys debts at market prices and restructures the debts for reselling for profit. It does not buy debts just to earn money from the debt management fee.

Regarding the sums of money Vinalines expects to get from the ports’ IPOs, analysts said that the money would not come to Vinalines immediately because the shares at the IPOs can’t be sold.

The Hai Phong Port, a profitable business, has sold only 46 percent of the total shares offered for sale, which accounted for 25 percent of the total shares. The proportions were lower for the Quang Ninh and Nha Trang port development companies.

Vietnam Airlines, the national flag air carrier, has also proposed the government to use the surplus to be gained from equitization for its business plans.

If the air carrier gets the nod from the government, Vinalines would also have the opportunity to get approval for its similar proposal.

Meanwhile, analysts do not think Vinalines would be accepted to join the ADB’s state-owned enterprise reform program because ADB always keeps strict control over the borrowers.

TBKTSG