Vietnam Airlines equitization: Gov’t yet to make decision
Vietnam Airlines equitization: Gov’t yet to make decision
The Vietnam Airlines Corporation and the Ministry of Transport (MOT) have urged the government to approve a VNA valuation plan, but economists have no sympathy for the plan.
Minister of Transport Dinh La Thang at a government meeting earlier last week urged the Prime Minister to approve the VNA valuation soon, so that VNA can take the next steps to prepare for the IPO (initial public offering).
Prior to that, at a meeting with VNA, Thang requested the national flag air carrier to launch the IPO in September 2014.
Vietnam Airlines reportedly had a book value of VND57.156 trillion as of March 31, 2013, or $2.744 billion, including state-owned capital of VND10.567 trillion, or $507 million.
The enterprise has been valued by foreign consultants at VND57.047 trillion, or roughly $2.74 billion. Of this, the state’s capital is worth VND23.493 trillion, or $1.128 billion.
VNA’s General Director Pham Ngoc Minh said that if the Prime Minister gives the nod to the enterprise valuation plan, VNA would be able to complete the equitization plan draft for submission to the government soon.
“It is highly possible that the holding company would do the IPO and organize its first shareholders’ meeting in the second half of 2014,” Minh said.
Regarding the equitization plan, Minh revealed that the state may still hold the controlling stakes of 70-80 percent in equitized Vietnam Airlines. However, the proportion of the stake will still need to be approved by the Prime Minister.
In fact, the details of the equitization plan, now put on the table of the Ministry of Transport’s leaders have been made public for many days, which have become a hot topic among economists.
VNA wants to preserve the entire surplus obtained from the additional share issuance which would be used to buy more aircraft and increase investment.
The amount of additional shares to be issued is equal to the state’s capital in Vietnam Airlines, or 75 percent of the chartered capital.
VNA also wants the government to come forward and give free guarantee for its 100 percent of loans to buy aircraft and aircraft engines.
It plans to propose the government to allow it borrow money without having to mortgage its assets in case it buys A350 and B787 aircraft.
Believing that VNA has made unreasonable claims, Dr. Nguyen Dinh Cung, head of the Central Institute for Economic Management (CIEM), said VNA’s equitization plan was “unacceptable”.
He went on to say that the equitization, by its nature, aims to change enterprises’ business strategies and reform corporate governance to help them develop more strongly. Meanwhile, VNA equitization would require more preferences from the state.
Dr. Do Thien Anh Tuan from the Fulbright Economics Teaching Program noted that he can see the attempt of Vietnam Airlines to “haggle” with the state.
VNA said it will equitize in accordance with the plan set, and in exchange for this, it wants more privileges.
Tuan noted that the VNA’s proposed equitization plan will only benefit VNA’s non-state shareholders.
vietnamnet
