CII General Director divests all capital to switch to bond investment
Ho Chi Minh City Infrastructure Investment Joint Stock Company (HoSE code: CII) has just announced an insider transaction. Accordingly, Mr. Le Quoc Binh, General Director and member of the Board of Directors of CII, has registered to sell all of the more than 6 million shares he holds.
The transaction is expected to be carried out by order matching or negotiation from October 10 to November 8. According to the closing price of CII shares on October 4 at VND18,650/share, Mr. Binh will earn about VND112 billion.
CII General Director divested all capital to switch to bond investment (Photo TL)
The purpose of Mr. Binh's above stock sale transaction was announced to be to switch to investing in CII's own convertible bonds. It is expected that on October 16, CII will issue 28.4 million convertible bonds with a par value of VND100,000/bond to shareholders at a ratio of 10:1.
This convertible bond has a term of 10 years, the interest rate is a combination of fixed and floating interest rates, interest is paid every 3 months. Interest for the first 4 periods will be a fixed interest rate of 10%/year. For the following interest periods, interest will be calculated by the reference interest rate of the interest period plus 2.5%/year. The convertible bond has no collateral, no warrants and can be converted into common shares every 12 months at a conversion ratio of 1:10 (1 bond equals 10 common shares).
Notably, if the divestment to invest in convertible bonds by Mr. Binh is completed, the position of this CEO will change from shareholder to bondholder of CII. In case the company goes bankrupt, bondholders will be given priority to repay the debt before shareholders. Thus, if a risk occurs and Mr. Binh has not converted the bonds into shares, this CEO will be given priority to repay the debt before all remaining shareholders.
Every day, we bear 4 billion in interest and a debt of 13,000 billion that exceeds our equity.
Issuing more bonds means that CII will increase the amount of debt in its capital structure. While this unit is currently also burdened with a huge debt and interest expense.
As of the end of the second quarter of 2023, CII's total assets were VND 26,649.2 billion. Of which, VND 954.6 billion was cash and cash equivalents. Along with that, there were VND 2.5 billion in bank deposits and VND 615.6 billion in securities investments.
The short-term debt structure in CII's capital accounts for 6,039.4 billion VND. Meanwhile, long-term debt also accounts for 7,112.3 billion VND. Thus, CII's total debt has now reached 13,151.7 billion VND, not including other payable obligations. This debt is also 62.2% higher than CII's equity.
Also on the issue of debt, CII's Q2 business results report recorded that the company's financial expenses increased by 41.2% to VND454.8 billion. Of which, interest expenses alone accounted for VND363.6 billion. This means that CII has to pay up to VND4 billion in interest every day, not including other operating expenses.
High debt still intends to study 6 BOT projects worth 75,000 billion
With debt exceeding equity by 62.2% and the pressure of interest payments of up to 4 billion per day, CII still confidently announced to shareholders that it was researching 6 new 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.
Recently, CII has just announced additional documents for the 2nd Extraordinary General Meeting of Shareholders in 2023 with information on preparing to issue an additional 7,000 billion VND in bonds to restructure capital sources.
Specifically, the company will seek international partners to guarantee payment of the VND2,400 billion bond lot within a 10-year term. At the same time, CII plans to issue more than VND4,500 billion in 10-year convertible bonds to shareholders. Currently, CII has worked with the State Securities Commission on the first issuance of convertible bonds with a value of VND2,840 billion as mentioned above.
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