Transport ministry to sell Cienco shares in lots

Wednesday, Dec 16, 2015 10:42

Cua Dai Bridge is one of major projects of Cienco 5. It comprises a bridge and two roads connecting Hoi An ancient town, a World Cultural Heritage site, and Duy Xuyen and Thang Binh districts with a combined length of 18.3km. — Photo
HA NOI (Biz Hub) — The Ministry of Transport will conduct auctions of the share in lots owned by the State in Civil Engineering Construction Corporations No 5 and No 6 on December 31.

The auctions of both companies, Cienco 5 and Cienco 6, will be held at the HCM City Stock Exchange.

The Cienco 6 has registered capital of VND492 billion (US$21.87 million), equally to 49.2 million shares, of which, the total State-owned share volume of nearly 45.70 million, or 92.8 per cent of registered capital, will be auctioned at the starting price of VND10,011 ($0.44) each, or total VND457.4 billion.

Earlier in 2014, the company launched its initial public offering with a sale of 28.7 million shares, but only a little more than 1 million shares were bought.

Meanwhile, its brother Cienco 5 will also sell the share lot as an effort to divest State investment capital. A share lot of nearly 10.18 million shares will be auctioned with the starting price at VND10,000 or a total at VND101 billion ($4.48 million).

The Cienco 5's registered capital is VND439 billion ($19.5 million), equally to 43.9 million shares, of which the State owns more than 27.7 million shares, occupied 63.18 per cent of the capital.

Cienco 5 launched the IPO in March 2014 with about14.21 million shares offered at a starting price of VND10,000 each, only 13.7 per cent of which were bought.

Cienco 5 and Cienco 6 are seen as major companies of the transport ministry. They focus on construction of railway, road, industrial parks and urban infrastructure.

The share sale in lots is seen as a successful method for State-owned capital divestment. Under this method, the transport ministry has divested nearly VND4 trillion ($177.8 million) in the last two years.

Vietnam Motors Industry Corporation (Vinamotor) is an example of the successful sale of shares in lots by the ministry. Last year it launched an IPO to sell 51 million shares, but the retail sale of shares failed. This year, according to the proposal from the transport ministry, the government has allowed the ministry to divest the State-owned capital by selling shares in lots. The auction is yet to be organised but many investors have expressed their interest in buying entire shares.

In a talk with Vietnam Television on December 15, Chairman of Vinamotor Nguyen Hai Trung said there were four investors interested in buying shares in lots. This was because if the transaction of shares in lots was successful, the investor could get the right amount of control of the business.

Director of Business Management Department Vu Anh Minh said if the business sold 70 per cent of shares in lots, it meant that the entire 70 per cent would be sold.

"In case the transaction was not in lots, the investor bought only 65 per cent, a level high enough for them to have the power of veto. What about the remaining five per cent? With such a little percentage of shares, the State still had to assign its representative of the shares, which would be really difficult to sell," Anh Minh said.

To push up the State-owned capital divestment, the government issued Decision No. 41/2015/QD-TTg dated September 15, in which the State would sell its shares in joint-stock companies which had not been listed or registered for trading held by ministries, ministerial-level agencies, government-attached agencies, and provincial-level People's Committees, or state-owned economic groups and corporations.

The shares of equitised state enterprises which are neither listed on the stock exchanges nor registered for trading on the Unlisted Public Company Market (UpCOM) may be sold in lots through auction at the stock exchanges based on in-lot sale plans approved by competent authorities.

Shares on sale may be divided into various lots for auction based on their quantity and market situation. There will be only one share lot to be auctioned each time, which is worth at least five per cent of the charter capital of the joint-stock company. — VNS

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