Truong Thanh sells 20pct stake to foreign partner

Truong Thanh sells 20pct stake to foreign partner

Truong Thanh Furniture Corporation (TTF) intends to sell a 20pct stake to a foreign partner as part of its charter capital increase plan.

Vo Truong Thanh, chairman and general director of TTF, said that the stake purchase with a partner from an East Asian country aimed to increase charter capital and reduce dependence on bank loans. He declined to give the foreign partner’s name, however.

According to Thanh, TTF plans to have two share issuances, with 14.4 million shares priced at VND5,000 each and issued for existing shareholders in the first phase. Meanwhile, the second share issuance will be for the foreign partner.

The management board presented to shareholders the share issuance plan of issuing 14.4 million shares to increase charter capital from VND590.6 billion to VND735 billion at a meeting in April. The expected time for first issuance is in the second or third quarter.

Thanh said that the in-principle deal has been signed. If it works, the stake proportions at TTF will have a big change, with equal stake amounts seen among the three groups of Thanh’s family, local shareholders and foreign shareholders.

TTF entered its difficult period in last year’s second quarter when many banks lowered credit limits and the firm was in need of stable working capital to meet the increasing production demand.

The credit limit reduction at banks has interrupted the firm’s cash flow, resulting in weaker production. After that, banks have continued to cut credit limits when seeing lower business results at TTF.

TFF earned only VND2.5 billion in after-tax profit last year while the figure obtained in this year’s first half is VND5 billion.

vir