Vinashin plans business review after debt payment miss

Vietnam Shipbuilding Industry Group, the state-run company known as Vinashin, plans to present a KPMG LLP report on its business to creditors by mid-year after it missed a payment on a dollar-denominated bank loan.

“The business review will help us to work out a proper plan for our future,” Vinashin Chairman Nguyen Ngoc Su said in an interview at his office in Hanoi. “It’ll take us about three to four months to complete and then show to the government and our lenders.”

Vinashin got a $600 million loan in 2007 from banks led by Credit Suisse Group AG that paid interest of 1.5%age point more than the London interbank offered rate, according to data compiled by Bloomberg. While it made a $6.8 million interest payment on Dec. 23, the company missed a Dec. 20 deadline to make a $60 million principal payment and asked lenders for a one-year extension, Su said.

Moody’s Investors Service cut Vietnam’s credit rating one rung to B1 on Dec. 15, citing the risk of a balance of payments crisis and Vinashin’s “debt distress” after Su told a forum that it lacks money to repay the loan. Vietnam and its state- backed companies will face greater difficulties borrowing after Vinashin’s default, Moody’s senior credit officer Alan Greene said Dec. 24, after state-owned Vietnam National Coal-Mineral Industries Group was downgraded to B2 from Ba3.

“The interest payment showed we are willing to pay lenders as soon as we can,” Su said. Vinashin will double revenue this year to more than 21 billion dong and will build “at least” 84 ships, he said.

Debt Burden

Vinashin risked bankruptcy after expanding into businesses from securities to tourism, accumulating about 86 trillion dong ($4.1 billion) of debt as of June, the government said in August.

Police are investigating Vinashin Finance Chief Ho Ngoc Tung following allegations of improper loan disbursements, the state-controlled Tuoi Tre newspaper reported on Feb. 16, without saying where it got the information. Police also arrested Trinh Thi Hau, former general director at Vietnam Shipbuilding Finance Co., Vinashin’s financing unit, according to the report.

Tung couldn’t be reached at his office in Hanoi, and two telephone calls earlier this week weren’t returned. Su declined to comment on the report.

The company’s debt will be cut to 53 trillion dong under a reorganization that ministries will work on through 2013, the government said in November.

Vinashin, based in Hanoi, accounts for as much as 80% of Vietnam’s domestic shipbuilding capacity, its website shows.- Business Week

Tags: Vinashin