Late payment of VND 2,871 billion bond interest, Hoang Anh Gia Lai (HAG) has to sell hotel
Recently, Hoang Anh Gia Lai Joint Stock Company (HoSE code: HAG) announced the Board of Directors' resolution on liquidating the company's unprofitable assets. In particular, Hoang Anh Gia Lai plans to sell Hoang Anh Gia Lai Hotel at No. 1 Phu Dong, Phu Dong Ward, Pleiku City, Gia Lai Province.
The purpose of liquidation as explained by HAG is to pay off part of the 2016 HAGL Bond debt at the bank. All proceeds from the hotel sale will be prioritized to pay off the debt for the above bond lot.
Hoang Anh Gia Lai (HAG) plans to sell hotels to pay off debts (Photo TL)
Also on September 29, 2023, Hoang Anh Gia Lai had to announce information about the late payment of interest on the HAGLBOND16.26 bond lot. The scheduled periodic interest payment date is September 30, 2023 with the total interest payable being VND 122.5 billion.
According to HAGL's announcement, the company has paid 380 billion VND of principal debt as of September 29, 2023. The remaining amount is expected to be paid in the fourth quarter of 2023. To date, the accumulated late payment interest has been 2,870.6 billion VND. The late payment principal amount is 1,157 billion VND.
The reason for the delay in payment is due to the delayed source of funds from the debt of Hoang Anh Gia Lai International Agriculture Joint Stock Company (HNG). Currently, there is a 3-party agreement on this debt for HNG to liquidate the company's unprofitable assets.
Picturesque financial reports, hundreds of billions in profit every quarter but still continuously late in paying debts
The last time Hoang Anh Gia Lai reported a loss was in the first quarter of 2021, with a loss after tax of VND 68.8 billion. Since then, HAG has continuously reported profits for 9 consecutive quarters. This is truly a dream result, a picturesque business picture that many companies dream of in the current difficult economic context.
In the audited consolidated financial statements for the first half of 2023, HAGL recorded net revenue of VND 3,144.9 billion, an increase of one and a half times compared to the same period last year. Gross profit reached VND 628.5 billion.
Notably, interest expense during the period increased from VND386.3 billion to VND482.1 billion. Meanwhile, financial revenue decreased from VND287.8 billion to only VND255.8 billion.
Selling expenses and administrative expenses accounted for VND105.1 billion and VND82.8 billion, respectively. At the end of the first half of 2023, HAGL recorded a profit after tax of VND385.2 billion.
Despite recording hundreds of billions of VND in profits each quarter, HAGL has continuously announced late payments of interest and principal for bond lots. In the first 6 months of the year alone, HAG has delayed interest payments for 2 periods for the bond lot coded HAGLBOND16.26. The first interest payment on March 30, 2023 is 177.9 billion VND, the second on June 30, 2023 is 177.9 billion VND.
The HAGLBOND16.26 bond lot was issued on June 30, 2016 with a term of 10 years, with a par value of VND 6,596 billion. The current outstanding bond amount is VND 5,271 billion.
Issue 130 million shares to raise money to pay off debt
Hoang Anh Gia Lai has also surprised investors again by approving a plan to issue 130 million private shares at a price of VND10,000/share. In the trading session on October 2, 2023, HAG shares were priced at only VND7,910/share, 26.4% lower than the offering price.
It is expected that HAGL will collect 1,300 billion VND if the private share issuance is successful. Of which, the company will use 323 billion VND to pay the principal and interest of the bond lot coded HAG2012.300 issued on June 18, 2012; 277 billion VND to restructure the debt of subsidiary Gia Cattle Lo Pang at TPBank; 700 billion VND to restructure the debt and add capital to Hung Thang Loi Gia Lai. In short, the main purpose of issuing shares is still to get money to pay off debt.
It is worth mentioning that the issued share price is 26.4% higher than the market price. Therefore, investors have every reason to doubt the success of this issuance plan. And if the share issuance fails, where does HAGL plan to find the money to pay the above debts?
This is not the first time HAGL has failed to issue private shares due to the offering price being too high compared to the market price. In April 2023, HAG failed once in a private issuance of 162 million shares with a par value of VND 10,500/share. The reason for the failure was that for many months prior, HAG shares could not reach the par value of VND 10,000/share, much lower than the offering price offered by Hoang Anh Gia Lai.
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