The old scenario may repeat itself this year, when the dispersed shareholder structure and lack of control by large investors make it difficult for many businesses to successfully organize annual general meetings of shareholders.
Fundraising plan unfinished
Entering the peak of the 2024 annual general meeting of shareholders season, a number of meetings have failed due to shareholders not attending.
On April 6, Ba Ria - Vung Tau Housing Development Joint Stock Company (Hodeco, code HDC) held a General Meeting of Shareholders, but only representatives of 47.91% of the total number of voting shares attended, the company plans to hold the second meeting on May 2. It is known that as of December 31, 2023, Hodeco only has one major shareholder, Chairman Doan Huu Thuan, owning 9.84% of the charter capital, the remaining 90.16% of the charter capital belongs to a group of small shareholders owning less than 5% of the charter capital.
Previously, on April 5, CEO Group Joint Stock Company (code CEO) also held a General Meeting of Shareholders, but only 33.98% of the total number of voting shares attended. Therefore, the General Meeting was unsuccessful, and the company had to plan to hold a second meeting on May 3. In the update of the list of major shareholders after the October 2023 offering, CEO has two major shareholders including Chairman Doan Van Binh, who owns 18.9% of the charter capital, Truong Thuan Trading and Investment Company Limited, which owns 8.26% of the charter capital, and the remaining 72.84% of the charter capital belongs to small shareholders owning less than 5% of the charter capital.
According to the new capital calling plan, Hoa Binh Construction Group wants to extend the implementation period of the offering in 2024 to 2025, instead of ending the offering in the first quarter of 2024.
In addition, the Group reduced the volume of privately offered shares from 220 million to 200 million shares, increasing the number of debt-converted shares by 41.5 million, to 74 million shares.
The fact that Hodeco and CEO Group failed to successfully organize the first General Meeting of Shareholders when the percentage of shareholders attending was lower than the minimum requirement means that the business plan and capital mobilization may not be implemented until at least the General Meeting of Shareholders is successfully organized.
By the end of 2023, Hodeco had a cash fund of VND 17.5 billion (accounting for 0.37% of total assets), total debt of up to VND 1,704.7 billion, equal to 89.4% of equity (the industry average recorded total debt to equity ratio of 69%). In 2023 alone, the Company plans to invest up to VND 2,856 billion.
To serve the investment plan, in 2024, Hodeco plans to mobilize 1,000 billion VND through bank loans and capital mobilization from issuance. In particular, for the bond issuance plan, the Company plans to issue a maximum of 500 billion VND in individual bonds.
Shareholder outreach initiatives
Having shared the same plight of dispersed shareholders, and the shareholders' meetings continuously being unable to be held due to the lack of minimum shareholder attendance, some businesses, although not yet holding a shareholders' meeting this year, have come up with initiatives to approach new shareholders.
At the Construction Development Investment Corporation (DIC Corp, code DIG), every year, the General Meeting of Shareholders is only held in Vung Tau City (Ba Ria - Vung Tau). This prevents small and medium-sized shareholders from attending when the Company's shareholder structure is dispersed after Chairman Nguyen Thien Tuan's family continuously reduced ownership in late 2022 and early 2023.
This year, DIC Corp has launched an initiative to combine in-person and online meetings to help individual investors everywhere participate in the Congress, increasing the chances of a successful organization compared to last year. It is known that on December 31, 2020, DIC Corp had 4 major shareholders, the ratio of external shares of small shareholders was 39.73% of charter capital, but by December 31, 2023, the ratio had reached 82.16% of charter capital.
Similarly, LDG Investment Joint Stock Company (code LDG) and Hoa Binh Construction Group Joint Stock Company (code HBC) will simultaneously hold online General Meetings of Shareholders in 2024. In particular, Hoa Binh Construction Group is a rather interesting case.
Specifically, Hoa Binh Construction Group held an extraordinary General Meeting of Shareholders on October 18, 2023. The meeting must be held twice to be eligible to proceed to approve the new capital mobilization plan and the debt conversion plan. However, in the submission to the upcoming General Meeting of Shareholders on April 25, the Group canceled the recently approved capital calling plan and at the same time wanted to approve the new capital calling plan.
In fact, at the end of 2023, Hoa Binh Construction Group had an accumulated loss of VND 3,240.3 billion, equivalent to 118.2% of charter capital, and the auditors doubted its ability to continue operating due to accumulated losses and some overdue debts. The continued inability to hold the General Meeting of Shareholders is creating difficulties in new cash flow for restructuring, as well as the risk of shares receiving additional penalties from HoSE.
Ho Chi Minh City Infrastructure Investment Joint Stock Company (code CII) also has a dispersed shareholder structure and has repeatedly failed to successfully hold its General Meeting of Shareholders. 2023 also witnessed a series of leaders selling shares to raise money to buy convertible bonds, further increasing the proportion of floating shares outside.
As of December 25, 2023, Ho Chi Minh City Infrastructure Investment Joint Stock Company recorded that almost all members of the Board of Directors and the Executive Board do not own shares, except for Chairman Le Vu Hoang who owns 0.13% of charter capital, Board member and Deputy General Director Nguyen Mai Bao Tram who owns 0.25% of charter capital...
In recent General Meetings of Shareholders, the Company has proposed giving cash incentives to encourage investors to attend or authorize a representative of the Company. However, these incentives have not been very effective, so the Extraordinary General Meeting of Shareholders at the end of February 2024 had to be held a second time to be successful.
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