Novaland's (NVL) shaky ground as bond burden drives share solution

Novaland's (NVL) shaky ground as bond burden drives share solution

The firm successfully paid interest on two bond series. But for the remaining bond issues, Novaland cited difficulties in securing funding and is currently negotiating with investors regarding rescheduling the payment timeline.

Buildings developed by Novaland in HCM City. — Photo thuonghieucongluan.com.vn

Novaland is facing mounting financial pressure after falling behind on more than VNĐ2.5 trillion (US$95.2 million) in bond repayments due in the first half of 2025.

In a recent statement to the State Securities Commission of Việt Nam and the Hà Nội Stock Exchange, the company confirmed it had been scheduled to make 12 payments covering principal and interest across eight bond issuances but fulfilled only two.

Novaland successfully paid interest on two bond series, NVL20202-03-340 and NVLH2224006. For the remaining payments, the company cited challenges in securing capital and said it is in talks with investors to reschedule the repayment timeline.

At an extraordinary general meeting on August 7 in Lâm Đồng Province, the Board of Directors presented two debt restructuring proposals.

The first includes a private placement of over 168 million shares at VNĐ15,747 per share, aimed at settling over VNĐ2.6 trillion owed to three major creditors.

NovaGroup, the largest shareholder, is expected to receive more than 160 million shares, while Diamond Properties will acquire around 7 million shares.

The issuance is scheduled between the fourth quarter of 2025 and the first quarter of 2026, pending approval from the SSC.

In addition, the shareholders approved a second plan to issue more than 151 million shares at VNĐ40,000 per share to address a principal debt of nearly VNĐ6.1 trillion related to 13 bond series issued between 2021 and 2022, with maturity dates primarily scheduled from 2023 to 2025.

Novaland's financial difficulties have hindered its ability to meet payment deadlines, prompting the company to negotiate a share swap arrangement that is expected to take place in 2026.

If both share issuance plans are successfully executed, Novaland's charter capital could increase significantly to nearly VNĐ22.7 trillion.

The restructuring measures are crucial, as a substantial portion of the newly issued shares will be allocated to major shareholders and related parties, potentially increasing their combined ownership to 39.59 per cent post-swap.

On the stock market, Novaland's shares dropped 1.6 per cent on Tuesday to close at VNĐ18,500 per share. 

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