Last update 12/14/2010 9:00:00 AM (GMT+7)
  

Titanic Vinashin could sink on first debt default?

VietNamNet Bridge – State-owned Vinashin has not received any decision from creditors over its request to postpone paying $60 million but, in the worst scenarios, the shipbuilder has plan B, assures chairman Su.

Troubled shipbuilding group to be restructured for survival

Vinashin’s chairman Nguyen Ngoc Su told Tuoi Tre Friday that the firm has met with Credit Suisse Group, representing the lenders, to ask to delay the debt for one year until December 2011. Payment is due in nine days.

According to Su, Credit Suisse supports Vinashin “in principle” but as Su is not sure about Credit Suisse’s influence on creditors, he is waiting for their direct decisions.

But in case the request is rejected, Vinashin already has “plans”, he said.

“It is included in the corporation’s strategy”.

“But we cannot announce [strategy] now”.

The conglomerate is supposed to settle the first 60 million by December 20. The amount is part of a $600 million debt incurred from non-government-backed bond issuance to international entities in 2007. The money is supposed to be paid in 10 installments, due at six-month intervals.

Vinashin has hired accounting and consultancy firm KPMG to advise on restructuring the aforementioned debt.

But in total, the beleaguered shipbuilder owes a whopping VND84 trillion (US$4.3 billion), according to latest government figures.

Su earlier said he was confident Vinashin could recover from such colossal debts in two years.

Sinking?

Meanwhile, an unconfirmed report Saturday by the Manila Bulletin www.mb.com.ph said the creditors have rejected Vinashin’s request.

According to the Manila Bulletin, a source close to Credit Suisse said the lenders ''will not be willing to extend the payment of the first 60 million dollars.''

If this is correct, ''it will be considered an 'event of default,''' the source said. This in turn ''will have very bad consequences for Vietnam's foreign financing capabilities for many years.''

Bloomberg Wednesday cited Standard & Poor’s as saying Dec. 6 that Vinashin may default within the next 30 days. It cited the World Bank as saying that said Vinashin “invested in non-core activities, falsified financial reports and is on the verge of default”.

Since mid-October, Standard & Poor’s has suspended its confidential solicited rating on Vinashin.

Save-our-ship plan but no buoy

Meanwhile, Minister of Planning and Investment Vo Hong Phuc has confirmed the government will not assist Vinashin in its debts.

“They will have to pay on their own”.

“We will restructure Vinashin’s projects and we will help Vinashin operate profitably so it can pay debts by itself”, Phuc was cited as saying by Bloomberg.

The restructuring plan has been ratified by Prime Minister Nguyen Tan Dung, to be implemented from 2011 to 2013.

Accordingly, Vinashin will focus on core businesses, which are shipbuilding and repairing; supporting industries for shipbuilding; and providing training courses in the field.

Its top personnel will be reshuffled, new management mechanism installed and ailing subsidiaries dissolved.

The Vinashin case has become a typical failure story of a giant state group and brought on heated debates. Its former chairman and CEO Pham Thanh Binh was arrested early August for “intentionally violating State’s regulations on economic management, causing serious consequences.”

Source: Tuoi Tre

 
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