Hoang Anh Gia Lai (HAG) is late in paying off a debt of 4,400 billion, what is the dream of 'getting out of debt'?

Hoang Anh Gia Lai is late in paying off 4,400 billion VND in bonds

Recently, Hoang Anh Gia Lai Joint Stock Company (Code HAG) has just announced unusual information about the payment of principal and interest of the bond lot HAGL.BOND16.26. Specifically, Hoang Anh Gia Lai of Mr. Doan Nguyen Duc will have to pay 140 billion VND in interest of this bond lot periodically on June 30, 2024.

Unable to pay interest on 4,400 billion VND bonds again, how is Hoang Anh Gia Lai's (HAG) dream of "debt-free" by 2025?

However, Hoang Anh Gia Lai was unable to pay this interest. This is not the first time HAG has failed to pay interest on the above bonds. As of June 30, 2024, Hoang Anh Gia Lai has delayed paying VND3,349 billion in interest and VND1,015 billion in principal. The total amount of interest and principal overdue amounts to nearly VND4,400 billion.

The reason for the delay in paying the bond interest was given by HAG because the company had not yet collected the full amount owed by Hoang Anh Gia Lai International Agriculture JSC (HNG). HNG had not yet been able to liquidate some unprofitable assets to get money to pay HAGL.

The sale of assets to repay debt is part of a three-party agreement between HAG, HNG and a large commercial bank.

Regarding the HAGLBOND16.26 bond lot, this is a 10-year bond lot, issued since 2016. A total of 6,596 bonds were issued with a face value of VND 1 billion each, equivalent to a total value of VND 6,596 billion. The bond lot has an interest rate of 9.7%/year with interest payment every 3 months. This is a non-convertible bond lot, without warrants, with collateral.

How is Hoang Anh Gia Lai's dream of "getting out of debt" by 2025?

At the recent 2024 Annual General Meeting of Shareholders, Chairman Doan Nguyen Duc shared about Hoang Anh Gia Lai's efforts to repay its loans. Accordingly, the model of growing bananas, durians and raising pigs is expected to help HAG eliminate accumulated losses in 2024, moving towards "fully repaying" the loan in 2025.

Regarding the asset structure of Hoang Anh Gia Lai, as of the end of the first quarter of 2024, the company has total assets of VND 21,170 billion. Of which, the amount of cash is only nearly VND 40 billion, accounting for a very small proportion of total assets.

Receivables currently account for VND7,657 billion while inventories have decreased to only VND804 billion. Most of the long-term assets are in fixed assets with VND5,903 billion and long-term unfinished construction costs with VND4,992 billion.

In the capital structure, HAG recorded up to 14,137 billion VND in liabilities. The amount of liabilities is twice as high as the owner's equity. In addition, the company's short-term debt is recorded at 4,450 billion VND, long-term debt is 3,366 billion VND.

This total debt alone is much higher than the equity. Meanwhile, the company is still recording an undistributed accumulated loss after tax of VND1,452 billion.

Source: https://www.congluan.vn/lai-cham-tra-lai-trai-phieu-4400-ty-dong-uoc-mo-dut-no-cua-hoang-anh-gia-lai-hag-dang-ra-sao-post302198.html