Novaland (NVL) proposes to convert $104 million in debt into shares to ease financial pressure

Novaland (NVL) proposes to convert $104 million in debt into shares to ease financial pressure

Property developer Novaland (NVL) plans to propose a private share issuance to settle VNĐ2.6 trillion (US$100 million) in debt at its extraordinary meeting on August 7, 2025, in Lâm Đồng.

The headquarters of Novaland Group in HCM City. — Photo mekongasean.vn

Facing persistent difficulties in the property market and a complex financial restructuring roadmap, property developer Novaland is revisiting a tried-and-tested strategy: converting debt into equity.

This move aims not only to improve cash flow but has also attracted strong investor attention, as reflected in NVL shares hitting the daily trading ceiling on July 17 and reaching their highest level in two years.

According to recently disclosed documents, Novaland (NVL) plans to present a proposal at its extraordinary general meeting on August 7, 2025, in Lâm Đồng to issue private shares in exchange for debt worth VNĐ2.6 trillion (US$100 million).

Most of the debt belongs to NovaGroup, a major shareholder linked to chairman Bùi Thành Nhơn, with over VNĐ2.5 trillion, followed by Diamond Properties with VNĐ111 billion, and individual investor Hoàng Thu Châu with VNĐ6.6 billion.

The liabilities will be converted into common shares, eliminating Novaland’s debt obligations to related parties while increasing its equity and charter capital.

These private placement shares will be subject to a one-year lock-up period, with the exact number determined based on the average closing price of the 30 trading sessions before July 31, 2025.

The proposed plan is expected to significantly support Novaland in improving financial indicators, restructuring its balance sheet and reducing cash flow pressure amid high interest rates and a sluggish capital market.

The implementation is scheduled for the fourth quarter of 2025 to the first quarter of 2026, subject to approval by the State Securities Commission.

In recent years, major shareholders have continuously helped Novaland meet debt obligations by liquidating secured assets, primarily NVL shares, to sustain operations. These support actions have been recorded in the financial reports as debts owed to shareholders.

Since the end of 2021, the shareholder group associated with chairman Nhơn has reduced its ownership from over 61.4 per cent to just 37.48 per cent by mid-June 2025, a level near the threshold for retaining veto rights at shareholder meetings. This sacrifice underscores their commitment to the company’s restructuring efforts.

However, Novaland’s challenges remain considerable.

In the first quarter of 2025, the company posted a net loss of over VNĐ440 billion. Management identifies legal procedures as the most significant risk this year, directly impacting the delivery of projects and revenue recognition.

The firm’s 2025 business plan forecasts losses ranging from VNĐ12 billion to VNĐ688 billion, depending on legal progress at key projects such as Aqua City, NovaWorld Hồ Tràm, NovaWorld Phan Thiết and developments in HCM City. 

Bizhub