A fruit farm run by agricultural group Hoang Anh Gia Lai. — Photo ndh.vn
Agricultural group Hoang Anh Gia Lai (HAGL) still has the controlling stake in its member HAGL Agrico despite having reduced its ownership to below 50 per cent.
The group’s chairman Doan Nguyen Duc remained as the chairman of HAGL Agrico and a majority of HAGL Agrico’s board of directors (four out of seven) were still HAGL officials, the company said in a statement on August 20.
HAGL Agrico was still a member of the group and its earnings would still be counted into HAGL’s financial reports, the group added.
Market speculations had been raised about the group’s power in its agricultural member firm after HAGL Agrico on August 13 issued nearly 222 million shares to convert 221,710 bond notes and increased its charter capital to more than VND11 trillion.
The bond notes were issued on August 8, 2018, worth VND2.2 trillion (US$94.6 million), to help HAGL Agrico increase funding for fruit plantation and debt restructuring.
Annual bond yield rate was zero per cent and matured in one year. Each bond note was worth 1,000 HAGL Agrico shares.
Automobile manufacturer Truong Hai Auto Corporation (Thaco) received the 222 million shares from the issuance, raising its stake in HAGL Agrico to 26.3 per cent and becoming the second largest shareholder in the agricultural business.
The deal was described by local media as “removing HAGL’s controlling power in HAGL Agrico”. After the deal, HAGL cut its ownership in HAGL Agrico to 49.24 per cent from the previous 63.45 per cent.
The bond conversion has taken HAGL one more step to completely removing non-core businesses from the group’s portfolio as it aims to become a purely agricultural business by selling assets in member companies to Thaco and the auto manufacturer’s units.
Recently, HAGL Agrico has sold its ownership of nearly 100 per cent in the sub-unit Dong Penh Co Ltd to Thaco. The value of the deal remains confidential.
In July 2019, HAGL Agrico transferred its stake at Dong Duong Rubber Investment and Development Co Ltd to Thaco.
In 2018, HAGL offloaded all of its shares in the real estate arm HAGL Land to Thaco. In the first half of 2019, HAGL recorded no earnings from cattle farming and hydropower business.
On August 8, 2018, Thaco signed a strategic agreement with HAGL to invest VND22 trillion in the agricultural group, helping the latter restructure its poorly-performing business.
In the first six months of 2019, HAGL Agrico earned VND779 billion in revenue, half of last year’s figure, and a loss of VND737 billion.
According to the company, recorded loss was caused by the firm’s ongoing restructuring process, which focused on selling unprofitable assets and changing fruit plantation plans.
As of June 30, 2019, the company’s total assets were worth VND30.9 trillion and payables were worth VND21.26 trillion. Bank loans were worth VND12.2 trillion, including VND7.1 trillion worth of short-term debt.
Meanwhile, HAGL announced revenue fell 68 per cent in the first half of 2019 to VND923 billion. The group recorded VND691 billion worth of losses in the period compared to a loss of VND11 billion made in the first half of 2018. — VNS