VietNamNet Bridge – The Vietnam National Shipping Lines (Vinalines) has asked for a lot of favors to settle debts before it goes equitized.

Vinalines finally has decided to follow the same path as Vinashin, which has changed its name into SBIC after the restructuring, to try to overcome the current difficulties.

The government “extended its hand” to save Vinashin by guaranteeing $600 million worth of international rollover bonds issued by the company, in an effort to restructure its huge debts, while asking domestic banks to clear 70 percent of the principal and accept a payment delay for the remaining 30 percent.

Will the same measures be applied to rescue Vinalines?

VietinBank, one of Vinalines’ 24 creditors, stated two weeks ago that it wants to convert Vinalines’ debt into equity in the shipping corporation, once Vinalines goes equitized.

Also, in order to put Vinalines into equitization, it will have to clear its “mountain of debt” and “embellish” the account books. Only by that time will Vietinbank be <able | willing>to convert the debt into an equity share.

However, the latest report of the Ministry of Transport, the governing body of Vinalines, disclosed that Vinalines took losses in the last three consecutive years. The loss it took in 2013 was triple that of 2012 (VND3.1 trillion vs VND1 trillion). The repeated loss has led to a sharp decrease in the holding company’s stockholder equity and sharp increase in its accounts payable.

Vinalines, which was once listed as a major player in the shipping industry, has been put under special finance control by the Ministries of Finance, Transport and commercial banks because of its insolvency.

With its current situation, analysts say, Vinalines is nearer the bankruptcy door than the equitization door.

By government edict, the shipping corporation has to undergo equitization by 2015, but analysts say it is too weak for that to be a realistic goal.

Meanwhile, Vinalines’ biggest creditors, including the Vietnam Development Bank (VDB) and four state-owned commercial banks, have announced they do not agree to freeze Vinalines’ debts.

Vinalines’ 24 creditors, more than a half of which are foreign commercial banks, have refused to freeze the principals and clear the interests for Vinalines, totaling VND11 trillion by December 31, 2013.

Vietinbank, which needs to collect VND2.23 trillion from Vinalines, is the company’s biggest Vietnamese creditor. The others include VDB, ACB, OceanBank and Vietcombank. Meanwhile, Natixis is the biggest foreign creditor, with the loan worth VND1 trillion.

The other plans Vinalines drew up in order to restructure its debts have also failed completely. The Asian Development Bank (ADB) has refused a loan worth $100 million requested by Vinalines, saying that Vinalines is not eligible for borrowing money under the program on state-owned enterprise reform.

Vinalines also considered the plan on issuing government-guaranteed rollover bonds in the international market. However, the government cannot do this because it has just done this for Vinashin.

As all the efforts made by Vinalines have been fruitless, analysts say the government needs to once again come forward and revive the corporation.

TBKTSG