Vinashin seeks 90% debt forgiveness on defaulted Vietnam bonds

Vietnam Shipbuilding Industry Group, the state-owned company with more than $4 billion of debt, asked holders of a local-currency bond it defaulted on in April to write off as much as 90% of the money owed

Vietnam Shipbuilding Industry Group, the state-owned company with more than $4 billion of debt, asked holders of a local-currency bond it defaulted on in April to write off as much as 90 percent of the money owed, according to a bondholder who met company officials last week.

Vinashin told creditors at the meeting in Hanoi it is unable to make any loan payments until 2015 at the earliest, Pham Viet Bac, general director of Ho Chi Minh City-based Sabeco Fund Management, which holds 30 billion dong ($1.5 million) of Vinashin bonds, said by phone yesterday.

“I’m very disappointed,” said Bac. The shipbuilder also declined to provide a copy of its latest audit, he said. Vinashin failed to pay a 9 percent coupon due on April 13 on a 3 trillion dong, 10-year bond issued in 2007.

Vinashin’s financial difficulties have raised concerns about government support for state-owned companies as it tries to speed up a privatization drive, locally referred to as equitization. Prime Minister Nguyen Tan Dung has also asked police to investigate whether there are any signs of corruption at the shipbuilder.

“I want the company to be transparent to its creditors,” Bac said. “We have the right to know.”

Vinashin Chief Executive Officer Truong Van Tuyen declined to comment when reached by phone at his office yesterday. Calls to Chairman Nguyen Ngoc Su weren’t answered.

The shipbuilder also asked foreign lenders for a one-year extension after missing a $60 million principal payment in December for a $600 million loan, Chairman Su said in February. The company hired KPMG to conduct a business review, he said.

The December missed payment showed that government support for banks and state companies isn’t guaranteed, Moody’s Investors Service said in an April 20 report.

Moody’s cut Vietnam’s credit rating one level to B1 on Dec. 15, citing the risk of a balance of payments crisis and Vinashin’s “debt distress.” Standard & Poor’s and Fitch Ratings Ltd. also cut Vietnam’s credit rating last year. – Bloomberg

Tags: Vietnam Shipbuilding industry, Vinashin