Mai Linh to sell 1,000 cabs to ease debt clearance

Dec 24th at 13:15

24-12-2012 13:15:49+07:00

Taxi operator and transport company Mai Linh Group is poised to sell 1,000 old cabs next year to pay its investors, chairman Ho Huy confirmed on Saturday.

Mai Linh, the second-largest taxi operator in Ho Chi Minh City after Vinasun, has mobilized some VND500 billion, or US$24.04 million, from 800 individual investors to fund its operation but is now financially incapable of repaying them on time.

Huy said the sales plan can only be implemented next year, as Mai Linh needs to maintain its market share in the last days of the year.

Earlier, he admitted in an interview with Tuoi Tre that the company has failed to repay debts to investors over the last three months.

The sale of 1,000 taxis, whose values range from VND150 million to VND400 million, is expected to gain the company VND200-300 billion.

Mai Linh has also sold 200 out of its 500 express buses to recoup capital for debt payment and investment in the low-cost taxi segment.

‘The losses are our fault’

The main cause for the company’s financial crisis, according to its chairman, is that they have used the short-term loans from investors to invest in long-term projects.

“It takes five years to recoup investment on a taxi, and we now don’t know how to get the money for debt clearance,” he said.

The company has mobilized capital from the public at 18 to 25 percent a year, while its 60 subsidiaries countrywide, which receive investment worth thousands of billions of dong, only contribute a 5 percent dividend each year.

Mai Linh has 10,000 taxis operating in 54 provinces and cities nationwide, but it has lost the top position in the most important market, Ho Chi Minh City, Huy added.

Moreover, the company also owes VND30 billion worth of social insurance to employees in its entire system, in addition to holding debts for taxes and medical insurance.

Debt negotiation

Huy said the company will negotiate with its creditors and ask to delay the clearance at least one to two years, as well as agree on lower interest rates.

“We are repaying depositors 5 to 10 percent a year higher than banks, while I think a 3 percent difference is suitable,” he said.

Mai Linh is committed to fully repaying the unsettled interest in the last three months to its creditors by the Lunar New Year, he asserted.

As for the original debts, the company will prioritize repaying those with small deposits under VND1 billion, while those with more than VND1 billion will be encouraged to become company shareholders.

Huy said Mai Linh is also trying to cut expenses.

“We are negotiating with partners to sell some realty projects, even at 20 to 50 percent losses,” he said.

“Those long-haul routes with poor revenues will be ceased, and the bus stations in some localities will also be removed.”