Series of restructuring decisions
At the meeting on May 18-20, the Board of Directors (BOD) of Hoa Binh Construction (HBC) passed a series of important decisions on personnel and finance. The decisions are expected to create thousands of billions of VND for HBC after going through a financial and personnel crisis.
Notably, Chairman Le Viet Hai directed the approval of purchasing 75% of the capital contribution of Thanh Ngan Real Estate Company Limited, to achieve 100% ownership of the project 127 An Duong Vuong (Ward 10, District 6, Ho Chi Minh City).
The total amount spent on this project is VND564 billion, equivalent to the amount of money raised from issuing 47 million HBC shares. Hoa Binh will issue 47 million HBC shares at VND12,000/share (1.5 times higher than the stock exchange price on the date of the resolution).
The 127 An Duong Vuong project has a total area of 15,394.7 m2 and has been granted a land use right certificate. Of which, the land area for high-rise commercial housing and services is 6,279.6 m2 and the area for education is 6,567.5 m2. The total amount paid to the state budget is 218 billion VND. The land price around An Duong Vuong street is currently trading at over 100 million VND/m2.
According to Mr. Le Viet Hai, this is a potential project, bringing in large revenue and profits for the group.
The two new strategic shareholders who bought 47 million HBC shares are Pham Quang Hang and Mai Huu Thung. The total number of shares these two investors bought is exactly equal to the number of shares that Mr. Le Viet Hai is holding. Mr. Hang and Mr. Thung agreed to buy at a price 50% higher after learning about Hoa Binh's difficult financial situation and understanding its promising foreign market development strategy.
In addition, Hoa Binh Construction also approved the implementation of the credit proposal and transaction with Vietnam Maritime Bank. At the same time, the Board of Directors approved the acquisition of all shares of Mr. Le Viet Hai at Pax International Company and the recovery of debts.
According to Chairman Le Viet Hai, with the above strategic decisions, Hoa Binh will soon stabilize its business situation, overcome difficulties and challenges and regain its inherent position in the near future.
In addition, Mr. Hai said that out of 21 lawsuits on late payment, 10 cases had court judgments and Hoa Binh won all of them. Of which, the principal debt recorded in the accounting books was 829 billion VND. The total amount according to the judgment that the defendant must pay to Hoa Binh is up to 1,223 billion VND, including late payment interest and other costs, which is 47.5% higher.
The civil war in Hoa Binh has ended?
Currently, the total amount of debt recovered is 593 billion VND, the remaining amount to be collected from these 10 won lawsuits is 630 billion VND. Mr. Hai added that in the coming time, the real estate market will recover, so the debts will be gradually processed, the recovery rate will not be less than 100%. The amount collected will increase by no less than 15% of the overdue principal debt. In HBC's business history, there has not been a single debt in the financial report that needed to be submitted to the Board of Directors for deletion due to the inability to collect the debt.
On the other hand, applying international accounting standards, in the coming time, Hoa Binh will re-evaluate its assets because the data recorded in the accounting books is too outdated. For example, the house at 235 Vo Thi Sau, the old headquarters of Hoa Binh, was recorded in the books for only 5.6 billion VND in 2000, but now it cannot be less than 100 billion VND. Similarly, the house at 233 Vo Thi Sau, land plot 1C Ton That Thuyet, District 4, Ho Chi Minh City.
Regarding the remaining value of machinery and equipment, it can be affirmed that it is much higher than the value recorded in the accounting books. According to the financial report on December 31, 2022, the total investment in machinery and equipment to date is 2,208 billion VND, of which 1,305 billion VND has been depreciated, leaving only 903 billion VND (equivalent to only 40% of the original price).
In fact, the scaffolding system is not rusted or damaged much. Cranes, hoists, concrete pumps, etc. are all in good working condition. Due to inflation, the new purchase price is always higher than the original purchase price of this asset.
In the coming time, Hoa Binh Construction will adjust its equity after issuing capital increase and revaluation of assets. The adjustment to increase equity will help Hoa Binh ensure its credit limit, significantly improve its financial capacity to overcome the current cash flow difficulties and help pay off all debts to suppliers and subcontractors.
On May 18, HBC appointed Mr. Le Van Nam (1976) as General Director of Hoa Binh Construction (HBC) from June 1. Mr. Nam held an important position at HBC, then moved to SCG Construction Group as General Director for a while and returned to HBC as CEO since June 1.
HBC also approved the dismissal of Mr. Truong Quang Nhat from the position of Deputy General Director according to his personal wishes. At the same time, Mr. Nguyen Khanh Hoang (born in 1982) was appointed to the position of Deputy General Director from June 1.
Approval of the dismissal of Mr. David Martin Ruiz from the position of Board Member for the 2022-2027 term according to his resignation letter. Mr. David Martin Ruiz's resignation letter from the position of Board Member will be considered and approved at the 2023 HBC Shareholders' Meeting.
Previously, HBC experienced an internal conflict within the company. The civil war of Hoa Binh Construction escalated at the beginning of the new year 2023, making many people worry that Vietnam's leading brand could fall into a downward spiral.
The civil war is complicated when both sides intend to sue each other before the authorities, even to "consider the criminal responsibility of individuals".
The dispute started on December 14, 2022, the Board of Directors passed a resolution approving the resignation of Mr. Le Viet Hai as a member of the Board of Directors, and elected Mr. Nguyen Cong Phu as Chairman of HBC to replace Mr. Hai and appointed Mr. Hieu (Mr. Hai's son) as General Director of HBC from January 1, 2023.
However, on the evening of December 31, 2022, Hoa Binh Construction announced the postponement of the resignation of Mr. Le Viet Hai from the position of Chairman of the Board of Directors from January 1, 2023; The Resolution also postponed the appointment of Mr. Le Viet Hieu as General Director.
On the morning of January 1, a number of members of the Board of Directors, including Mr. Nguyen Cong Phu, Mr. Le Quoc Duy, Mr. Duong Van Hung and Mr. Albert Antoine, issued a document rejecting the move made by Mr. Le Viet Hai on December 31, 2022, alleging that the HBC Board of Directors meeting did not have enough members as required.
However, recently, a series of leaders in opposition to Mr. Le Viet Hai have withdrawn from HBC one after another.
1. The Board of Directors approved the sale of all contributed capital of Hoa Binh Innovation Center One Member Co., Ltd. (HBIC) of 167 billion. The part spent on the project was 127 billion, with a profit of 40 billion.
2. Approval of the purchase of the remaining 75% of shares of the 127 An Duong Vuong project (Ward 10, District 6, HCMC) from Thanh Ngan Company to achieve 100% ownership. The price of HBC shares sold for this project is 12,000 VND/share (1.5 times higher than the current price on the stock exchange).
3. Approval of the proposal and credit transaction with Vietnam Maritime Commercial Joint Stock Bank. The maximum short-term credit limit is 2,000 billion VND. Of which, the maximum loan limit is 1,000 billion VND; the maximum guarantee limit is 1,000 billion VND. Purpose: supplementing working capital, guaranteeing for business activities, maximum term is 12 months from the date of signing the Credit Contract to issue 5 million shares to Sanei.
4. Approval of the agreement to transfer land use rights of Mr. Le Viet Hai and Ms. Bui Ngoc Mai for 3 land plots with a total area of 7,218.6 m2 on Phan Van Hon Street, Tan Thoi Nhat Ward, District 12, Ho Chi Minh City for 120 billion VND.
5. Approval of the acquisition of all shares of Mr. Le Viet Hai at Pax International Company according to actual contributed capital (138 billion VND).
For all of these transactions, Hoa Binh will not use cash but only issue shares and recover the advances for previous business purposes. The recovery of these advances will help HBC have more assets to improve its financial capacity.
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