Hoang Anh Gia Lai (HAG) mortgaged 165 million shares to borrow 1,050 billion for its subsidiary.

Hoang Anh Gia Lai mortgaged 165 million shares to borrow 1,050 billion

The Board of Directors of Hoang Anh Gia Lai Joint Stock Company (HAG) has just approved the mortgage of assets to secure the loan of Gia Lai Livestock Joint Stock Company at a commercial bank.

Specifically, Hoang Anh Gia Lai currently owns 165.75 million shares of Gia Lai Livestock JSC. The company will use these shares as collateral for a maximum loan of VND1,050 billion of Gia Lai Livestock at the bank.

Hoang Anh Gia Lai (HAG) mortgaged 165 million shares to borrow VND1,050 billion for its subsidiary (Photo TL)

According to the consolidated financial statements for the first quarter of 2024, Hoang Anh Gia Lai is holding 85% of the charter capital at Gia Lai Livestock. This is a subsidiary established by HAG in 2014 to operate in the field of crop and livestock farming. The investment in Gia Lai Livestock is recorded in the financial statements at an original cost of VND 1,814 billion.

The fact that Hoang Anh Gia Lai had to use shares in Gia Lai Livestock as collateral for a new loan of more than VND1,050 billion is a worrying sign. Especially when the company has just announced late payment of interest and principal on bonds. Of which, the principal is overdue VND1,015 billion, and the interest is overdue VND3,349 billion.

The above debt is from the HAGLBOND16.26 bond lot, issued in 2016 with a term of 10 years. 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.

Profit dropped 25%, total debt of 7,816 billion exceeded equity

Regarding the business results of the first quarter of 2024, Hoang Anh Gia Lai recorded revenue of VND1,240 billion, down 26.9% over the same period. Gross profit in the first quarter of 2024 reached VND498.3 billion, up 10.2%.

Financial revenue in the period decreased by 48.1% to VND73 billion. On the contrary, financial expenses decreased slightly by 4.4% to VND177.4 billion. Selling expenses and business management expenses increased sharply by 60.5% to VND153.7 billion.

After deducting all expenses and taxes, HAG's after-tax profit was 226.4 billion VND, down 25.3% over the same period.

As of the end of the first quarter of 2024, Hoang Anh Gia Lai has VND 4,450 billion in short-term debt. Along with that is VND 3,366 billion in long-term debt, not including other payables. Hoang Anh Gia Lai's total debt is VND 7,816 billion.

HAGL's total debt is currently much higher than the company's equity, showing existing risks in capital management.

Source: https://www.congluan.vn/hoang-anh-gia-lai-hag-the-chap-165-trieu-co-phieu-de-vay-1050-ty-cho-cong-ty-con-post304111.html