Deputy Prime Minister Vuong Dinh Hue has ordered the State Audit Office of Vietnam to review enterprise values and deal with financial problems at Vietnam Southern Food Corporation Limited (Vinafood 2) after it reported millions of USD in losses.
Vinafood 2 to be reviewed after posting losses
The State Audit Office of Vietnam was asked to review Vinafood 2 to assess the firm's value for equitisation process and its financial problems. The task must be completed by December 1.
As of March, 2015, Vinafood 2 was estimated to be worth VND14.27bn (USD639m), with a state stake VND4.98bn in capital.
The Ministry of Agriculture and Rural Development submitted an equitisation plan for Vinafood 2 to the prime minister. According to the plan, the state will sell part of its capital while issuing more shares to increase the firm's charter capital.
It is estimated that Vinafood 2's charter capital will increase to VND5trn (USD224m). The state would hold a 65% stake, strategic investors hold 25% and the remainder will be auctioned. However, Vinafood 2 still has various financial problems.
Vinafood 2 recently reported that it had racked up USD47.6 million in losses, claiming that it was affected by the sharp drop of rice export value from strong competition from Thailand and India and tighter credit policies by some banks.
Huynh The Nang, director of Vinafood 2, said even though they had implemented several measures to recover loan payments but there were still VND600bn (USD26.88m) of bad debt owed by numerous sub companies including Vo Thi Thu Ha Import-Export Company and Thinh Phat Kon Tum Corporation. Vinafood 2 also wrongly invested VND500bn in aquaculture industry. Those debts have accumulated since 2013 and have been announced publicly to all investors.
Vinafood 2 asked the government to remove the firm from the list of businesses being closely supervised for ineffective operations so that Vinafood 2 could access loans from banks more easily.
It also proposed to increase the amount of state-owned stake if the share offer fails to be a complete sell-out. Once the corporation's operation returns to normal, the equitisation process can be re-started.
