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SCIC suggests negotiation-based capital withdrawal scheme
Le Song Lai, Deputy General Director of SCIC, said that the Ministry of Finance is seeking the government’s permission to apply a negotiation-based capital withdrawal scheme. Currently, capital withdrawal must be conducted through auctions.
Could you please tell us about the SCIC’s capital withdrawal process which has been drawn up per request of the National Assembly’s Standing Committee?
SCIC has withdrawn capital from 45 enterprises, and the number of enterprises is expected to be 70 by the end of 2008. The process of capital withdrawal will still depend on the market’s performance. However, SCIC plans to retain its capital in 150 enterprises, while withdrawing capital from the other 700.
There exist some difficulties with the capital withdrawal mechanism and SCIC is working with relevant ministries to settle the problems.
I have learnt that SCIC has suggested a negotiation-based withdrawal capital scheme to the Ministry of Finance. What did the ministry say?
The ministry has considered the proposal by SCIC related to the new capital withdrawal scheme and it has reported this to the government. I firmly believe that the new scheme will be approved by the government.
Do you believe that the negotiation-based scheme is better than the auction-based scheme currently applied?
Negotiations will help shorten the capital withdrawal process, and help sell the enterprises which cannot be sold by auction. You know, some enterprises could not be sold even when three auctions were organised. However, if we hold negotiations, we will find suitable buyers.
If the negotiation-based scheme is approved, how can we assure that capital will not be lost?
Before conducting negotiation-based transactions, we have to hire third parties which make independent price assessments, serving as the starting prices in negotiations with investors.
Could you please tell us about the business performances of the enterprises in which SCIC has capital?
Many of the enterprises have a lot of difficulties, and they have had to adjust targeted growth and turnover. However, no enterprise is facing bankruptcy.
We have received a proposal to give support to the enterprises, but I have to say that SCIC is just a shareholder. It is really difficult to persuade shareholders to spend money to buy shares enterprises issue additionally if the enterprises do not have feasible business plans.
How about SCIC’s capital withdrawal plan?
The State Capital Investment Corporation (SCIC) is trying to withdraw capital from small-scale companies, the enterprises in which SCIC holds less than 50% of capital, the enterprises which do not see high growth rates and do not operate in very important fields of the national economy.
How can SCIC attract investors if SCIC itself cannot find enterprises attractive enough to invest in?
We think that the stake buyers will be the staffs of enterprises and partners who are buying stakes to expand their operations, foreign investors who want to become strategic shareholders. The key is the price.
VNN
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