Truong Thanh Wood: No one buy debt at DongA Bank, wanted to cancel private placement of nearly 58 million debt swap shares

Debt repayment pressure is weighing on Truong Thanh Wood’s shoulder as the debts are due this year while the plan of a private placement to swap debts at DongA Bank cannot be implemented.

Truong Thanh Wood Industry Corporation (Ticker: TTF) has announced a number of reports to the 2021 Annual General Meeting of Shareholders (AGM), scheduled for April 27th meeting in Binh Duong.

In which, notably, there is a report on stopping the implementation of the private placement plan for debt swap at DongA Bank.

At the 2020 AGM, shareholders passed the plan to separately issuance of nearly 58 million shares at a price of VND 2,128 per share, a swap rate of 0.2218:1 (VND 2,218 in exchange for 1 additional shares). The expected implementation time is in 2020.

TTF said that after the resolution of the General Meeting of Shareholders 2020 was passed, the company’s Board of Directors negotiated with a number of debt buying partners. However, because the parties could not agree on the issues, by the beginning of April this year, there was still no suitable partner to buy back debt at DongA Bank.

Therefore, the company will submit to shareholders through canceling this private placement and offering other alternatives.

According to the audited consolidated financial statements of 2020, as of December 31, 2020, TTF’s total borrowings were VND 507 billion, all short-term loans, accounting for nearly 23% of total capital.

In which, TTF has 144 billion dong borrowed from the bank, including more than 123 billion dong from DongA Bank, which is overdue when the term of principal and interest payment is from July 27 to September 23, 2016. This DongA Bank loan interest rate is 8.5% / year and is guaranteed by 12,859 m3 of wood materials and finished products of the group of companies. TTF’s interest to pay overdue debts by the end of 2020 is more than VND 71 billion.

Truong Thanh Wood: No one buy debt at DongA Bank, wanted to cancel private placement of nearly 58 million debt swap sharesSource: Notes to the audited consolidated financial statements for 2020.

In addition to the 123 billion dong overdue debt, in February, TTF also had a bank debt to pay nearly 20 billion dong to the Agriculture and Rural Development Bank.

As of December 21 this year, TTF had an unsecured debt of nearly VND 363 billion for Mr. Bui Hong Minh.

Thereby, it can be seen that the pressure to repay the debt is pressing on TTF’s shoulders when the debts are maturing while the plan of private placement to swap debts at DongA Bank cannot be implemented.

At the General Meeting of Shareholders in 2020, talking about the selection of the plan to write off debts, Mr. Mai Huu Tin, Chairman of the Board of Directors frankly said “there is no other way to do it, TTF cannot borrow from banks, since I continued. Simply because the old loan at DongA Bank is bad debt, there is no condition to pay off completely. Between us and DongA Bank there are at least a few dozen times of work, even the bank has sued the company”.

“In the previous TTF loan application, it is not sure if the signatures on it are the correct signature. When we moved the factory to build kitchen cabinets, we discovered the quality of collateral in East Asia and other facts. The price of the outside product is lower than on the “mortgage contract”.

At that time, Mr. Tin also shared that all the money invested in the new factory was the company’s savings, money from the liquidation of goods, but could not borrow anywhere. If this amount is cleared, TTF will completely clear bank loans and have a chance to develop.

“But in reality, we are prevented from borrowing and can not clear old bad debts at DongA Bank. This is also the only loan left at TTF’s bank. If we wipe this out, we completely clean up the bank loan debt and in fact only Vingroup debt”, said TTF Chairman.

Other documents on business plans have not been announced by the enterprise but according to the invitation letter, the enterprise is expected to present to shareholders more important contents such as issuance of preferred shares for capital mobilization and debt swap; a report on investment guidelines, capital contribution to overseas companies.

Regarding the business situation, according to audited data, in 2020, enterprises reached VND 1,214 billion in net revenue, an increase of 68% compared to 2019. The company returned profit with a net profit of nearly VND 31 billion after two consecutive years of heavy losses and TTF shares escaped the delisting of HOSE.

However, by the end of 2020, TTF still carries accumulated loss of 3,044 billion dong, “eroding” equity when negative to 585 billion dong.

Accumulated losses, negative equity, negative working capital, and overdue debts are the problems that caused auditors to doubt about Truong Thanh Wood’s ability to work continuously.

Source: vietnambiz.vn – Translated by fintel.vn

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