City bourse to oust bankrupt pharmaceutical company

Shares of Vien Dong Pharmaceutical Co (DVD) will be delisted from the HCM City Stock Exchange following the HCM City People’s Court order to place the company into involuntary bankruptcy, the State Securities Commission confirmed yesterday.

The court granted ANZ Bank’s motion on August 5 to proclaim DVD in bankruptcy after the pharmaceuticals producer failed to repay its debts to the bank.

The HCM City Stock Exchange has also found DVD to be delinquent in making its 2010 year-end financial disclosures, as well as first- and second-quarter disclosures for this year.

With DVD’s latest published financial statements, which were for the fourth quarter of last year, the company’s total outstanding liabilities reached VND918.8 billion (US$44.6 million). At that time, DVD reportedly owed VND368 billion ($17.9 million) to An Binh Bank, VND95 billion ($4.6 million) to ANZ Bank Viet Nam, VND52 billion ($2.5 million) to HSBC Bank Viet Nam and nearly VND44.5 billion ($2.2 million) to Indovina Bank.

The amount of cash DVD held at that time was less than VND1.6 billion ($77,700) and inventories on hand were valued at only VND56.2 billion ($2.7 million). DVD’s consolidated financial report in September of last year valued tangible assets after depreciation at only VND58 billion ($2.8 million), while valuing the intangible assets of the company at VND226 billion ($11 million).

Late last year, some investors also paid DVD nearly VND70 billion ($3.4 million) in deposits to buy additional shares, but the State Securities Commission subsequently cancelled the issue and DVD has not been able to repay the deposits.

A State Securities Commission official told the newspaper Dau tu Chung khoan (Securities Investment) that these investors were not considered DVD shareholders when the issue was cancelled and so would be listed as unsecured creditors in the company’s bankruptcy.

At an extraordinary shareholders meeting in March, DVD decided to sell its assets, including its interest in a Lili of France plant, to An Binh Bank for VND300 billion ($14.6 million), as well as land use rights it held in HCM City and shares of another pharmaceutical company, Savifarm. — VNS

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