Seafood processor Hung Vuong (HVG) continues to sell assets amid debt burden

Seafood processor Hung Vuong Joint Stock Corporation has agreed to sell its entire stake in Hung Vuong Song Doc JSC – its latest move to liquidate assets to pay debts.

 

In a filing to the Ho Chi Minh Stock Exchange, management board of the company approved the selling of more than 3.2 million shares, accounting for 51 per cent in Hung Vuong Song Doc, but did not specify when the transfer would occur.

Hung Vuong has started to sell its assets since 2017 as part of debt payment rescheduling with creditor banks. Its total assets fell 36.7 per cent, from VND13.9 trillion (US$596.6 million) in September 2017 to VND8.8 trillion in March 2019.

The number of its subsidiaries and affiliates decreased from 13 by the end of 2018 to nine as of March.

The company has liquidated its real estate properties and decided to dissolve the An Lac Real Estate in which it held 76 per cent of the capital last year. It also divested its entire ownership of 54 per cent capital in Sao Ta Foods, cut its stake in Viet Thang Aquafeed from 90.36 per cent to 33.16 per cent and sold Tan Tao Cold Storage 2.

Despite the sale of assets, the company is still in financial trouble, having received disappointing results from the 14th administrative review (POR14) for antidumping duty in the US with a tax of up to $3.87 per kg (compared to zero tax in the preliminary results).

Despite net profit of VND6.7 billion in the first three months of this year, Hung Vuong is burdened with total debt of VND6.63 trillion, of which short-term debt from banks is about VND3 trillion.

The firm’s equity is VND2.2 trillion and cumulative losses reached more than VND398 billion.

Ernst & Young, the firm's auditor, has emphasised the business operation of the company depends on its ability to arrange cash flow, restructure bank debts and make profits in the future.

Cash flow from operating activities of the company was negative VND107 billion in the first quarter of this year, a worsening situation compared to a positive cash flow of VND557 billion in the same period last year.

Shares of the company, code HVG on the Ho Chi Minh Stock Exchange, halved in value in a month after the POR14 result, dropping from VND8,000 per share in mid- April to VND3,700 each on Monday.

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