Firms clamouring to buy Vinamotor's capital

Wednesday, Mar 18, 2015 18:32

Vinamotor specialises on producing and assembling various buses, trucks and passenger cars with 29 seats and above — Photo

HA NOI (Biz Hub) — Multiple companies have offered to buy the entire State-owned capital of Vietnam Motors Industry Corporation (Vinamotor), comprising 85.58 million shares, or 97.7 per cent of its registered capital.

The interested companies have made a proposal regarding the same to the Ministry of Transport. The firm's stocks drew investor attention after the Government offered to sell the State-owned shares in the corporation earlier this year.

The interested investors include Sacom Investment and Development Joint Stock Company (Sacom), TMT Auto JSC, Vietnam N.A Motor Co. Ltd. (Vinamco) and Thanh Cong Ninh Binh Auto JSC.

According to the ministry's proposal for State-owned capital divestment sent to the Prime Minister; for entering the bidding round, investors will have to meet certain demands, such as having owned capital of more than VND855 billion (US$40.14 million) by the time of auction, committing to own the bought shares for at least five years and publicly offering to purchase shares of other shareholders at Vinamotor within 30 days, from the time the investor becomes the firm's shareholder.

However, only one investor will be allowed to buy the whole State-owned capital. Each investor would come up with their own way to take over the company.

TMT Auto JSC had organized a meeting of shareholders last month, at which it got approval from shareholders to purchase the State-owned capital of Vinamotor. The shareholders also approved issuing VND1.5 trillion ($70.42 million) worth of corporate bonds.

The Chairman and CEO of TMT Auto JSC Bui Van Huu, said the company's leaders were preparing negotiations and seeking out domestic and foreign partners to buy its corporate bonds, but the important thing was to balance this with the real need for capital to be used for buying Vinamotor's stake.

According to, TMT had met potential partners, including banks and credit institutions. If the shares were VND10,000 ($0.46) each, TMT would have to mobilize at least VND855.8 billion ($40.17 million) via bond sales.

Besides, TMT and Vinamotor share a close relationship, in which, Vinamotor is a big share holder at TMT, owning a 19.84 per cent stake in TMT, or 6.12 million shares or VND61.12 billion ($2.86 million) in book value. This is also the biggest long-term fund invested by Vinamotor in its 22 associated companies.

TMT Chairman Huu also owns more than 9 million shares in TMT, accounting for 29.38 per cent of the company's working capital. He is also a representative of shareholders at Vinamotor, owning 6.65 million shares or 21.56 per cent of the firm's registered capital.

Meanwhile, Huu's brother Bui Quoc Cong owns 3.28 million TMT shares or 10.64 per cent of registered capital.

Till date, TMT is the only one that has to formulate a plan for restructuring Vinamotor if the purchase is successful. However, there might be a few difficulties challenging the investor after the takeover of Vinamotor, including resolving its losses and sizeable debt.

Sacom was the first company to propose to the Ministry of Transport that it buy State-owned capital equal to 97.7 per cent of Vinamotor's registered capital for VND10,000 per share.

However, up till now, it has not taken any new action regarding the takeover of the firm.

Sacom has a working capital of VND1.3 trillion. It specialises in making bronze cables and electronic wires, while Vinamotor's business focuses on assembling automobiles, engineering and transportation services.

Sacom's purchase offer was surprising because there isn't much connection between the businesses of the two firms.

In a document sent to the Minister of Transport, Vinamco introduced itself as the firm with a decade of experience in automobile trading and services. It was established in 2005 and was one of the first agents of Honda Vietnam. It had been doing business in the fields of real estate, restaurants, hotels and garments.

With a working capital of VND2 trillion ($93.89 million), Vinamco expressed hope to become a strategic investor in Vinamotor. However, the expected volume of Vinamotor shares that it plans to buy has not been revealed.

Meanwhile, Thanh Cong Ninh Binh Auto JSC, a subsidiary company of the Thanh Cong Group, which assembles and distributes tourism buses, has also shown an interest in buying the whole State-owned capital of Vinamotor.

The company is also known as the agent for distributing Hyundai light trucks and maintaining and replacing genuine parts for the South Korean firm.

During an interview with VnExpress, a Vinamotor representative said the firm had been waiting for an advice from a consulting unit. "At the last minute, if there is still more than one investor interested in the firm's shares, we will hold an auction, based on current regulations."

We hope that our final partner will be involved in the same business as us and will continue with Vinamotor's producing and assembling various buses, trucks and passenger cars with 29 seats and above," said the leader.

To become Vinamotor's key shareholder, these companies will have to compete with each other to take over the firm.

Vinamotor had reportedly run into losses during the recent years. But its tangible assets, including workshops and wide land areas, are considered "gold" positions in many localities and could earn a lucrative profit. For example, Vinamotor's headquarters are spread over 20,000 square metres on prime land Hang Trong and Minh Khai Streets in Ha Noi. — VNS

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