VietNamNet Bridge – Thai billionaire Charoen Sirivadhanabhakdi, the biggest shareholder of Berli Jucker Group, may not be able to buy Metro Cash & Carry Vietnam as planned because the group’s shareholders have opposed the deal.

The Bangkok Post reported on January 9 that BJC’s shareholders were against the plan to take over the German retail chain in Vietnam at the group’s shareholders’ meeting that took place one day before.

The newspaper reported that if BJC pursues the deal worth 25 billion baht, or 655 million euros, it may face high financial and legal risks.

Under an agreement signed in August 2014, BJC would take over Metro Cash & Carry Vietnam’s 19 distribution centers and related properties worth $875 million. In October 2014, the two sides agreed on additional provisions related to the payment method.

Under additional provisions, BJC will have to issue a letter of guarantee worth $655 million two working days before the documents about the deal are submitted to the government of Vietnam for approval and for permission to amend Metro’s investment certificate.

If the government of Vietnam requires that payment invoices be issued before the investment certificate is amended, BJC will have to transfer $655 million in advance to Metro Vietnam’s account.

The Nation newspaper quoted legal experts as saying that it would be risky for BJC to pay all the money at once not knowing if the investment certificate amendment would be approved, or it it could take the money back in case the deal fails.

If BJC’s shareholders agree with the board of directors to proceed with the deal, the group may face financial difficulties. It is estimated that the group would have to borrow 40.52 billion baht for the deal, which would push the ratio of debt on equity up to 1.99.

If BJC cannot arrange enough capital to wrap up the deal, it would face legal problems because it is cannot fulfill the duties stipulated in the agreement signed between the two parties, according to JayDee Partners law firm, a financial consultant to BJC.

However, the Thai billionaire still has other ways to implement his plan to take over Metro Vietnam.

Thai newspapers quoted Weerawong Chittmittrapap, a director of BJC, as saying that TCC Holdings owned by the Thai billionaire would continue negotiating with Metro Vietnam so as to create a deal to be beneficial to both parties.

If the two sides can settle existing problems, TCC Holdings will ask to gather another shareholders’ meeting to discuss the deal.

In the worst case scenario, if BJC’s shareholders once more reject the deal, Metro Vietnam will become a part of TCC Holdings instead of BJC.

The Planning and Investment Department of HCM City, where Metro’s head office is located, has confirmed that it has not received any official report about the transfer deal.

Kim Chi