The state-owned shipping firm Vinalines is seeking permission from the Ministry of Finance and the Ministry of Transport to sell six cargo vessels at low prices in order to cut losses and repay debts.
Most of the ships were bought from overseas for nearly VND4.4trn (USD200m) and have been in use for over 20 years. Vinalines suggested selling the ships for between 16%-10% of their original prices.
Vinalines to sell six ships from the fleet
Vu Anh Minh from the Ministry of Transport said Vinalines had been asked to report on several measures to cut losses such as how much would it lose if it all the ships were kept for future use in the next three years and would it lose less if the ships were to be sold now. Moreover, selling the ships is also part of the restructuring plan at Vinalines which was approved by the prime minister in 2013.
Talking about the cheap price, Nguyen Canh Tinh, director of Vinalines said the ships were bought while the cargo shipping was more profitable. At that time, bulk carriers were preferred because of cheap prices and quick return on capital.
But the industry has declined and the prices of dry cargo ships as well as transport fees have dropped massively since the economic depression in 2008. Since 2011, Vinalines' fleet has been downsized from 154 to 102 ships in order to pay bank debts. 20% of the ships are over 20 years old and 42% are over 15 years old.
A Vinalines' representative also said as those ships were dated, they were no longer suitable for the modern market nor could they compete with new ships. The longer they keep the ships, the more losses they will incur, the representative said.
In the first five months of 2016, the total revenue of Vinalines was VND796bn (USD36.2m), it reached just 28% of the goal. The shipping firm still has VND7.5trn in debt.
"Selling these ships is necessary to cut loss and restructuring the fleet. It will ease some of the financial burden especially in preparation for Vinalines' equitisation process," Tinh said.
The firm also hopes to be able to buy more modern ships for better and more profitable investments.
The six ships can carry up to 250,000 in dead weight tonnage (DWT), in which the Vinalines Global and Vinalines Trader have size of 70,000 DWT. The 26,369DWT Vinalines Fortuna was bought at VND341.5bn but will probably be sold at VND34.9bn. The Vinalines Star and Vinalines Ocean bought for VND378bn and VND376bn respectively will also be sold and much cheaper prices at VND34.4bn and VND34bn.
