On July 25, Coteccons Construction Joint Stock Company (CTD) - a leading construction enterprise in Vietnam, issued a press release regarding the economic contract dispute between Coteccons and Ricons Construction Investment Joint Stock Company, right before the announcement of the results of a main bid package in the Long Thanh Airport construction project.
Previously, on July 24, Coteccons received a notice from the Ho Chi Minh City People's Court regarding the acceptance of Ricons' request to open bankruptcy proceedings.
Coteccons said that recently there have been many extremely unfavorable events for the construction industry, especially in the field of urban housing and tourism construction. Accordingly, since 2017, very few urban housing projects have been granted construction permits, while the human resources in the industry continue to increase while the source of work has decreased sharply.
“The lack of jobs that creates an imbalance between supply and demand has made the construction market more competitive than ever. And some contractors have taken this opportunity to escalate unnecessary conflicts, making the construction environment increasingly negative,” Coteccons’ announcement emphasized.
Regarding the economic contract dispute with Ricons, CTD affirmed that there were transactions including receivables and payables (referred to as debts) between the two companies.
According to Coteccons, the cause of the debt arose from the period before 2019, CTD and Ricons were managed and identified as contributing components to an ecosystem of 7 interconnected member companies, including: Coteccons, Unicons, Ricons, Newtecons, BM Windows, Sol E&C, Boho.
During the operation in an ecosystem, some projects where Ricons acts as the general contractor generate related party transactions involving CTD as a subcontractor, such as in the projects: Regina Hung Yen, Dong A project design, Golden Palace project and some equipment rental transactions between the two companies.
Current debts have not been settled due to problems in determining the value of the debt along with legally qualified documents.
On the contrary, some projects in which Coteccons acted as the general contractor incurred debts to Ricons as a subcontractor that have not yet been settled, such as: Newtaco project, Regina Phase 4 project, Regina Miracle factory, Regina Phase 6, Regina Hung Yen project, Vinfast factory project, Simco project.
According to Coteccons, these are the reasons leading to economic contract disputes between the two companies and despite repeated requests to organize meetings and documents, Ricons has not been able to provide legal documents according to the requested debt value.
CTD said it is in the process of bidding for very important and influential projects. Although there are debt disputes, the economic contracts will soon be resolved at arbitration centers, but Ricons lacks cooperation and has filed a lawsuit with the Court declaring bankruptcy.
This is an action that CTD believes is not coincidentally being pushed to take place at this time.
Therefore, CTD requests that construction contractor Ricons cooperate, promptly provide documents that meet legal requirements and determine the value of the debt arising between the two parties so as not to affect the Company's bidding process.
In the context of a sluggish real estate market, construction businesses have high expectations for public investment capital worth tens of billions of USD.
Many stocks in the public investment sector or related sectors such as Vinaconex, Coteccons, HHV, C4G, LCG, HPG, TCD, ELC, ITD... are expected to benefit from the large amount of public investment capital expected to be disbursed in the second half of 2023. In addition, there are also tens of billions of USD in credit capital from banks.
According to the plan, public investment capital disbursement in 2023 is VND711,000 billion. This means that about VND495,000 billion (equivalent to nearly USD21 billion) will be disbursed in the last 6 months of the year.
Coteccons owes Ricons 323 billion VND
According to Coteccons' first quarter 2023 financial report, this enterprise has a payable to Ricons of nearly 323 billion VND as of March 31, 2023, out of a total of nearly 4,000 billion VND in short-term debt.
In an announcement issued today, July 25, Coteccons said that the company has nearly 4,000 billion VND in usable cash.
In the trading session on July 24, CTD shares of Coteccons Construction JSC hit the floor, losing nearly 7% to VND73,700/share.
Conteccons is currently leading the Hoa Lu Joint Venture (with the Thai contractor and Hoa Binh Construction (HBC), one of three contractor consortia submitting bids for package 5.10 of Vietnam Airports Corporation (ACV) at the Long Thanh Airport project. This is a bid package for the construction and installation of passenger terminal equipment, expected to start in August 2023. This bid package is worth up to 35,000 billion VND.
Another consortium participating in the bidding is VIETUR, led by a contractor from Türkiye, whose members are companies in the Newtecons ecosystem of construction tycoon Nguyen Ba Duong (formerly Chairman of Coteccons) and Vinaconex Corporation.
There is also the CHEC-BCEG-Vietnam Contractors consortium led by a Chinese contractor.
Meanwhile, Ricons is an unlisted enterprise.
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