CII's subsidiary buys 4.2 million NBB shares
CII Infrastructure Construction JSC (CEE), a subsidiary of Ho Chi Minh City Infrastructure Investment JSC (Code CII), has just registered to buy an additional 4.2 million NBB shares. The expected trading time is from October 12 to November 10 for investment purposes.
Currently, CEE is holding 7.84 million NBB shares, equivalent to a holding ratio of 7.82% and is a major shareholder of the company. If the stock purchase transaction is successful, NBB will increase its ownership to 12.04 million shares, equivalent to a ratio of 12.02%.
CEE, a company in CII's ecosystem, bought 4.2 million NBB shares despite "sluggish" business (Photo TL)
In the morning trading session on October 10, 2023, NBB shares were priced at VND 19,350/share. Thus, it is expected that CEE will have to spend about VND 81 billion to complete the above purchase transaction.
One notable point is that both CEE and NBB are related to CII. At the end of 2022, CII holds 84.42% of charter capital at CEE. At the same time, CII also holds 37.52% of charter capital at NBB. Thus, the purchase and sale of shares between CEE and NBB is no different from taking assets from the left hand to the right hand.
In addition, Mr. Liu Hai Ca, Chairman of the Board of Directors of NBB, is also currently the Chairman of the Board of Directors of CEE.
NBB's business is gloomy, profits are meager, maintaining symbolic interest rates
The purchase of 4.2 million additional NBB shares by CEE, a subsidiary of CII, took place in the context of NBB's unsatisfactory business results, with profits earned in recent quarters only at a symbolic level.
Before the third quarter of 2021, NBB regularly recorded after-tax profits of tens to hundreds of billions of VND. However, from the fourth quarter of 2021 onwards, the company's profits suddenly dropped to only a few billion VND, and in the first quarter of 2023, NBB only made a symbolic profit of 133 million VND.
In the second quarter of 2023, NBB achieved revenue of 179.7 billion VND, profit after tax only reached nearly 1.2 billion VND. Accumulated revenue in the first 6 months of the year of NBB reached 193.8 billion VND, profit after tax only reached 449 billion VND.
Explaining the fluctuations in revenue and profit, NBB said the reason for the decrease in profit was due to the return of business premises at Carina Shopping Center by some units in the first phase of 2023, leading to a decrease in revenue and profit in this field.
NBB's business is not effective, the subsidiary in CII's ecosystem still "holds" 4.2 million more shares to increase the ownership ratio. This move makes some shareholders feel confused, especially when CII itself is also having problems in capital structure with a debt of 13,000 billion VND.
CII struggles with 13,000 billion debt, plans to issue 7,000 billion bonds for restructuring
At the end of the second quarter of 2023, CII's short-term debt increased by VND 615.6 billion, to VND 6,039.4 billion. Long-term debt also accounted for VND 7,112.3 billion in the capital structure. Thus, CII's total debt amounted to VND 13,151 billion.
CII's equity as of the end of the second quarter was only VND8,106.8 billion. Thus, debt alone was 62.2% higher than equity, showing the existing risks in CII's capital structure.
Also in the second quarter, CII had to pay 363.3 billion VND in interest expenses alone. This means that CII has to "shoulder" 4 billion VND in interest every day.
Regarding the debt issue in the capital structure, in the documents of the 2nd extraordinary General Meeting of Shareholders in 2023, scheduled to be held on October 17, CII also proposed a number of solutions.
The company is planning to restructure its capital by issuing an additional VND7,000 billion in bonds. Of which, CII will work with an international financial institution to guarantee payment of bonds worth VND2,400 billion, with a term of 10 years.
In addition, CII plans to issue convertible bonds to existing shareholders with a total value of VND4,500 billion, with a term of 10 years.
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