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Vinashin has been using loans effectively: chairman
Vietnam Shipbuilding Industry Group (Vinashin)'s outstanding loans have reached $2bil, which is much higher than its stockholder equity. Vinashin’s Chairman Pham Thanh Binh talks about its borrowing, paying debts and investments.
Please tell us about the audited results for the 2007 financial report?
Vinashin’s financial capability has been rated high. The fact that Vinashin chose KPMG as its auditor shows Vinashin’s determination to follow international practice and standards.
Vinashin absolutely can issue bonds on the international market itself at this moment. In 2006, after its financial report was audited, Vinashin successfully issued international bonds, raising $600mil in capital to serve its production and business plan. Vinashin plans to raise another $400mil from international bonds to implement projects.
Vinashin have borrowed $2bil, which is much higher than its stockholder equity. What would you say about the loans?
Vinashin has got big contracts to build ships with the total value of $12bil, which will ensure jobs until 2012-2014. In order to fulfill the contracts, Vinashin is carrying out 70 big investment projects which need huge quantities of capital. Most of the loans of Vinashin are long-term loans with reasonable interest rates, 6-7.1% for foreign loans, and 12% per annum at the most for domestic loans. In 2007, Vinashin got the profit of VND500bil after it paid interest on the loans, an encouraging result.
Regarding worries about the loans being bigger than the stockholder equity, I can say that Vinashin’s total assets now are estimated at VND100tril, while the average turnover in the last few years was some VND20tril. Meanwhile, the stockholder equity, which is stipulated by the Ministry of Finance, remains at VND5tril.
Vinashin has asked the government to allow it to re-assess its assets, which will be undertaken by KPMG.
Are the foreign loans considered as the corporation's or government’s debts?
Vinashin’s debts. You may remember that three years ago, the government raised $750mil through international bond issuance. The government then lent money to Vinashin at commercial interest rates.
Vinashin is contributing capital to a $9.7bil steel joint venture with Malaysia’s Lion Group (Vinashin contributes 26% of capital). Where did the big sum of money come from?
It is true that Vinashin has made a capital contribution to the steel complex in Ninh Thuan province. However, it is not only makes capital contribution in cash, but also in brand name value and land use rights.
Could you please tell us about outward investments by Vinashin?
Some 4.7% of the total investment of VND50tril, a very small percentage. Vinashin’s biggest investment is the one in Bao Viet insurer, but the investment proves to be very safe. You may have heard that state agencies have concluded that Vinashin has been using the loans from the government’s bonds for shipbuilding projects, which means it has been using the loans in the most effective way.
VNN
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