Vinashin must pay its own debts – Vietnamese Minister

Troubled Vietnamese shipbuilder Vinashin is responsible for re-paying its own debts, including $60 million due later this month to international creditors, a government minister said on Wednesday.

The comments by Minister of Planning and Investment Vo Hong Phuc confirmed that one of the country’s biggest state-owned firms was unlikely to get financial aid from the government to tackle a mountain of debt that brought it close to bankruptcy.

“As we have said, we will make efforts so that Vinashin can operate profitably so that it can re-pay its debts on its own,” Phuc told reporters.

The government announced earlier this year that Vinashin, or the Vietnam Shipbuilding Industry Group, was near collapse under some $4.4 billion in debt it had racked up through rapid expansion and a slump in shipping during the global recession.

It ordered the bloated conglomerate to be reorganised, raising questions about repayment of the debt.

Vinashin’s first test comes on Dec. 20 when $60 million on a $600 million eight-year loan to a consortium of creditors led by Credit Suisse comes due, but it has asked for a delay.

The creditors were expected to be meeting on Wednesday to discuss the proposal.

Phuc, asked specifically if Vinashin’s responsibility for its own debts included the upcoming $60 million payment, replied: “That is correct, they must pay it by themselves”.

What happens to Vinashin will set the tone for Vietnamese borrowing in the near future. Should Vinashin fail to make its debt payments, not only would the cost of capital rise for other state-owned companies, but questions may be asked about the government’s ability to service its debt, analysts say.

Standard & Poor’s on Monday cut its long-term credit rating on Vietnam’s state mining group Vinacomin after signs the government might not help Vinashin with debt payments.

Tags: Vinashin debt