VietNamNet Bridge – Vietcombank has become the first credit institution in the country to sell a US$19-million debt of Vietnam National Shipping Lines, or Vinalines, to Vietnam Debt and Asset Trading Corporation (DATC).

The Vinalines Sky ship, which Vinalines used a loan from Vietcombank to buy

Vietcombank once rescheduled this loan, which is due this year, but Vinalines still failed to pay. DATC did not disclose the discounted value of the loan but said it is less than 50% of the original value and all the unpaid interest is written off.

Vinalines borrowed some US$35 million in 2007 from Vietcombank when it purchased Vinalines Sky vessel and the loan was equivalent to 85% of the investment in the vessel in that year. The loan was reduced to approximately US$19 million and had been frozen as of end-2013.

Vietcombank is one of the 22 domestic and international lenders which had given loans worth over VND11.4 trillion to Vinalines as of the end of 2013. Earlier, some foreign banks were aware of Vinalines’ insolvency in the near future, so they agreed to cut 70% of loan value and write off the interest.

Vinalines is restructuring debts at the request of the Government to reduce the risk of insolvency by negotiating with creditors to restructure loans.

Meanwhile, for Vinashin, the Government has asked the central bank and lenders to sign debt restructuring contracts, cutting 70% of original debts and issuing bonds for the remaining 30% in 10 years.

Therefore, it is difficult for Vinalines to follow the scheme as banks do not want to lose a large part of the loans.

In this plan, DATC acts as an intermediary to buy debts from banks. Vinalines then will take over the debts again and pay brokerage fees to DATC.

After the deal with Vietcombank, Vinalines will negotiate directly with banks or via DATC to restructure debts.

DATC deputy general director Pham Manh Thuong said the firm has reached interim agreements with other creditors. However, they have not agreed on prices as all banks have offered high prices.

According to Vinalines, debt trading based on market prices is just one of the debt restructuring proposals. At the negotiations that are underway, Vinalines has suggested banks continue interest write-offs and restructuring original debts if they do not agree to sell debts immediately.

Besides, Vinalines has suggested banks turn the loans into shares as the parent firm of Vinalines has plans to launch an initial public offering (IPO) in the first quarter of 2015. Otherwise, Vinalines will present a list of its profitable affiliates to banks so that they can turn debts into shares at these firms.

To buy back debts, Vinalines plans to raise funds from ineffective asset sales, capital divestment and ports’ IPOs. However, it may face difficulties as asset sales are time-consuming and few buyers are interested in port IPO shares.

SGT/VNN