Lehman’s Asia liquidator to revamp Vinashin

Vietnam is bringing in the man who led the liquidation and sale of Lehman Brothers in Asia to help restructure Vinashin, the debt-ridden shipbuilder that was meant to be the poster child for the country’s vision of state-led development.

The government is finalising the appointment of KPMG, Vinashin’s auditors, as restructuring advisers, according to a person familiar with the matter, in a move likely to reassure anxious foreign creditors.

The KPMG advisory team will be led by Edward Middleton, the Hong Kong-based partner at the firm who led the restructuring of Lehman’s Asian assets and quick-fire $225m sale of the rump to Nomura in 2008.

“It’s a heavyweight team that will advise the new Vinashin management team on how to carry out its restructuring plan and deal with its debt situation,” the person said.

Nguyen Tan Dung, the prime minister, unveiled a plan last week to refocus Vinashin on its core shipbuilding business.

The company came close to collapse after amassing debts of 86,600bn dong ($4.4bn) as it expanded into everything from power plants to motorbike manufacturing.

But a suggestion on Friday by Nguyen Ngoc Su, Vinashin’s chairman, that the company will try to delay a $60m foreign loan repayment due on December 22 caused renewed worry among foreign debt holders.

“The government’s intentions with regards to the restructuring are very good,” said one foreign debt investor. “But they’ve fallen short on investor relations, playing to the domestic audience because of the political connotations. The KPMG appointment should improve the flow of information.”

Mr Dung, who championed the plan to turn state-owned enterprises into powerful conglomerates in the image of South Korea’s chaebol, has come under intense pressure since the scale of the problems at Vinashin started to emerge in June.

At least six Vinashin executives have been arrested following allegations of economic mismanagement as the Hanoi government has attempted to reassert control. On Wednesday, Mr Dung, who like other senior Communist leaders will have to seek re-election at a five-yearly party congress in January, will be questioned by delegates in the national assembly over the Vinashin affair. In comments published on the government website on Friday, Mr Su said that Vinashin would repay its debts, but added that the company might try to delay the first $60m principal repayment on a $600m unsecured loan arranged by Credit Suisse in 2007.

Foreign creditors, who also hold most or all of a $187m corporate bond issued via Deutsche Bank in the same year, lent to Vinashin in the belief that it was backed by an implicit sovereign guarantee. Any substantial renegotiation of the Credit Suisse loan would require unanimous creditor support, which might be hard to achieve given the limited time frame and the widely held nature of the debt. -By Ben Bland – FT

Tags: Vietnam Shipbuilding industry, Vinashin restructure