CII prepares to issue additional 7,000 billion VND in bonds
Ho Chi Minh City Infrastructure Investment Joint Stock Company (HoSE Code: CII) has just announced additional documents for the 2nd extraordinary general meeting of shareholders in 2023, scheduled to be held on October 17, 2023. This includes the content of finding an international financial institution to underwrite the issuance of nearly VND 2,400 billion in bonds.
This is part of CII's capital restructuring plan outlined in the documents of the 2nd Extraordinary General Meeting of Shareholders in 2023. Specifically, in the coming time, CII plans to promote capital restructuring by issuing bonds with a total value of nearly 7,000 billion VND.
CII plans to issue an additional 7,000 billion VND in bonds. Of which, 4,500 billion VND are convertible bonds for shareholders (Photo TL)
CII is working with an international organization rated AA- by Fitch to guarantee payment of bonds that CII plans to issue with a total value of VND2,400 billion, with a term of 10 years.
In addition, CII also plans to issue Convertible Bonds to existing shareholders with a term of 10 years and a total value of VND4,500 billion. Currently, CII is also working with the State Securities Commission on the dossier for the first issuance of Convertible Bonds with an issuance value of about VND2,840 billion.
According to CII's estimate, if the 4,500 billion VND of bonds are successfully issued and converted into shares, CII's Debt/Equity leverage ratio will decrease from 2.2 times to only 1.1 times.
The burden of a 13,000 billion debt weighs heavily on CII, and it still has to pay 4 billion VND in interest every day.
CII’s plan to issue additional bonds was proposed in the context of the company’s asset structure showing many problems. At the end of the second quarter, total assets reached VND26,649.2 billion, down 6.7% compared to the beginning of the year.
Of which, short-term debt increased by 615.6 billion VND in the first 6 months of the year, reaching 6,039.4 billion VND. Long-term debt currently accounts for 7,112.3 billion VND in the capital structure.
Thus, CII's total debt is 13,151 billion VND while equity is only 8,106.8 billion VND. Debt alone is 62.2% higher than equity.
With the huge debt of over 13,000 billion VND mentioned above, CII is currently having to bear interest payments in the second quarter of up to 363.3 billion VND. This means the company is having to pay interest expenses of up to 4 billion VND per day, not including other operating expenses.
Only escaping losses thanks to financial revenue, CII still intends to 'embrace' 6 more BOT projects with a total investment of 75,000 billion?
Also in the documents of the 2nd Extraordinary General Meeting of Shareholders in 2023, CII presented to shareholders the study of 6 BOT projects with a total investment of 75,000 billion VND. The projects include:
Ho Chi Minh City - Trung Luong - My Thuan Expressway Phase 2 with 22,000 billion VND; Improving traffic capacity in the Northwest area of Ho Chi Minh City with 19,059 billion VND; Upgrading and expanding National Highway 1A from Tan Kien intersection to Long An border with 11,982 billion VND; Project to improve traffic capacity along Pham Van Dong - Nguyen Xi - Ung Van Khiem - Nguyen Huu Canh route with 10,108 billion VND; Project to upgrade and expand the North-South axis from Nguyen Van Linh to Ben Luc Long Thanh Expressway with 6,625 billion VND; Project to upgrade and expand the connecting route of Ho Chi Minh City - Trung Luong Expressway with 5,048 billion VND.
As mentioned above, the heavy debt burden is making many investors skeptical about CII's ability to research and implement this BOT project worth up to 75,000 billion.
Especially in the context of CII's business situation also having problems. In the second quarter of 2023, CII's revenue reached 843.4 billion VND, down 15.2% over the same period. The company's gross profit reached 250.6 billion VND, down 55.4%. Gross profit margin decreased from 45.5% to only 23.9%.
In fact, CII's Q2 business results escaped losses only thanks to a 128.2% increase in financial revenue, from VND259.5 billion to VND461.9 billion. This is truly another sign of instability in the company's business operations.
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