Source: Viet Nam News
Thái Nguyên Iron and Steel Corporation (Tisco) has proposed its parent company – the Vietnam Steel Corporation (VNSteel), alongside the Ministry of Industry, Trade and Finance, and other relevant agencies assist the firm to extend loan dues and restructure debts to resolve financial issues, dantri.com.vn reported.
At its annual shareholder meeting on June 12 Tisco reported that its total combined net revenue rose 10.9 per cent year on year to VNĐ19.8 trillion (US$880 million) in 2017 and its pre-tax profit was VNĐ898 billion, nearly tripling that of 2016.
However, the company has encountered difficulties in high production costs, which has reduced its competitiveness in the market, while it does not have enough capital to either continue production or expand its factory.
During the second-stage expansion of Tisco’s operations, which took place from 2009-10, VNSteel guaranteed Tisco a VNĐ1.86 trillion loan from the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank). Tisco is yet to pay back the debt.
Tisco reported its charter capital was VNĐ1.84 trillion. The company had spent VNĐ1.5 trillion on the expansion project and it had lent VNĐ531 billion ($23.6 million) to other businesses, but the investments were not efficient.
The company retrieved a part of its outward loans, reducing its receivables to around VNĐ450 billion.
According to the firm’s management board, the biggest problem Tisco has to face is how to resolve the loan borrowed from Vietinbank. To resolve the current financial issues, the management board has offered to mortgage two iron and coal mines to any financial institution or business that will buy the VNĐ1.86 trillion debt from Vietinbank so that VNSteel is no longer involved in Tisco’s loan.
Another solution is for the Government to sell its ownership in Tisco to the private sector and reduce its stake to below a specific ratio that allows private firms to take a decisive role in Tisco’s management board.
However, the divestment plan remains unknown and there has been no business or financial institution that is interested in buying the Government’s stake in Tisco.
The two plans have put Tisco in a dilemma over whether it should transfer the State capital to the State Capital and Investment Corporation (SCIC) or remain under the management of the industry and trade ministry and continue resolving existing issues.
The Ministry of Industry and Trade has been asked to submit a divestment plan of Tisco to the Prime Minister for consideration as soon as possible.