Illustration. Source: internet.

Large debt, big losses

In the recently announced consolidated financial statements of Hoang Anh Gia Lai Joint Stock Company (HAGL), Ernst & Young Vietnam Co., Ltd. highlighted the company's accumulated loss of VND7,371 billion on June 30, 2021. In addition, at this date, HAGL was also violating some commitments in the loan contracts.

Specifically, in a bond loan worth VND5,876 billion at BIDV that would mature on December 30, 2026, the company had mortgaged 4,852 hectares of rubber and 7,102 hectares of palm oil.

However, as of June 30, 2021, the actual rubber and oil palm planting area was lower than the commitment in the credit contract. Also at this time, HAGL had not yet made payment of interest due on June 3, 2021 with a total value of VND1,483 billion.

Similarly, among the collateral for two long-term loans at Eximbank that would mature on December 31, 2024, the company's cows are included. However, HAGL has now liquidated all cows, so the number of cows cannot be guaranteed according to the provisions of the credit contract.

According to Ernst & Young, the above issues indicate the existence of an uncertainty that may cast significant doubt on HAGL's uninterrupted operation ability.

The consolidated financial statements of the mid-year 2021 of Vietnam Shipping Joint Stock Company (VOS) are showing accumulated losses of VND699 billion and overdue debts of VND520 billion. According to AASC Auditing Firm Co., Ltd., these contents indicated the existence of uncertainties that may cast doubt on VOS's uninterrupted operation ability.

For Ha Bac Fertilizer and Chemicals Joint Stock Company (DHB), as of June 30, the company's mid-year consolidated financial statements showed that the total short-term debt was larger than the current assets of VND5,601 billion; accumulated loss of VND5,162 billion was higher than equity of VND2,393 billion. According to Ho Chi Minh City Auditing and Informatics Services Co., Ltd., these revealed essential uncertainties that may cast doubt on the assessment of Ha Bac Fertilizer's uninterrupted operation ability.

Auditing firms also questioned the uninterrupted operation ability of many enterprises due to problems related to accumulated losses and debt situation such as Ocean Group Joint Stock Company (OGC), BOT Thai Ha Bridge Joint Stock Company (BOT), Duc Quan Investment and Development Joint Stock Company (FTM).

What do enterprises plan

According to HAGL's management board, the mid-year consolidated financial statements of this enterprise are set on the uninterrupted operation basis assuming that HAGL could use its assets and pay its liabilities in the normal business process in the near future.

Accordingly, at the date of the consolidated financial statements, HAGL had planned for the next 12 months including the expected cash flow generated from the partial liquidation of financial investments, recovery of debts from partners and cash flow generated from ongoing projects. HAGL is working with lenders on adjusting the breached terms of the relevant loan contracts. Accordingly, HAGL could repay the debts when they are due and continue operating in the next accounting period.

HAGL's Board of Directors is also consulting shareholders on the use of share capital surplus to handle accumulated losses. Accordingly, HAGL intends to use the entire share capital surplus accumulated through capital increases of VND3,264 billion to reduce the corresponding accumulated loss. If this plan is approved, the company's accumulated loss will be reduced to VND4,285 billion.

For VOS, the company's board of directors also believes that the company will continue to maintain production and business activities in the future.

Accordingly, VOS will continue to implement the restructuring project. In which, in 2021, it will continue to focus on debt restructuring with Baoviet Bank through Vietnam Debt Trading Co., Ltd in the direction of reducing the obligation to pay principal debt and interest; balance cash flow to carry out debt purchase and sale projects to ensure feasibility and bring the highest efficiency to the company.

VOS will also restructure its fleet. In which, the liquidation of the Dai Nam ship has been completed. Besides, it will continue to hire outside vessels to increase transportation capacity, increase competitiveness, output, revenue, creating more jobs for employees and improve efficiency.

Similarly, the Board of Directors of Ha Bac Fertilizer also believes that the company can balance cash flow to pay debts when they are due to carry out normal business activities of Ha Bac Fertilizer.

Other enterprises also plan to overcome the current situation. However, the effectiveness of those options still needs time to review. Accordingly, to protect the interests of investors, currently HAG, VOS, FTM and OGC have been under the control of HoSE.