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TV tube producer Orion-Hanel filing for bankruptcy
Orion-Hanel, a TV tube producer, has finally decided to file for bankruptcy, putting an end to the one-time famous joint venture.
Nguyen Huu Tuong, Deputy Chairman of the Hanoi People’s Committee, the governing body of Hanoi Electronics Company (Hanel), the Vietnamese partner in the Orion-Hanel joint venture, said on December 22 that city authorities had agreed with the joint venture’s leadership on initiating the procedures for bankruptcy.
A source from Orion-Hanel said that the petition to file for bankruptcy should have been submitted to the Hanoi People’s Court on December 19. However, the joint venture still needs to add some more documents and will officially submit it this week.
Orion-Hanel, a joint venture between Hanel and South Korea’s Orion, was established in 1993 with the investment capital of $178mil, of which the Vietnamese side contributed 30%, and South Korea 70%. The joint venture specialised in making TV tubes and accessories for TVs and computers.
After 11 years of operation, during which the joint venture always led foreign-invested enterprises in Hanoi, on October 16, 2004, the joint venture put its second TV tube factory into operation in Sai Dong B industrial zone. The factory created 1,200 additional jobs, raising the total number of the company’s staffs to 2,500.
However, the second factory was not as successful as initially hoped.
“I thought the new factory would have brought bigger opportunities, but it did not. It is because of the outdated imported production line,” a staff of Orion-Hanel said.
Meanwhile, the market has been witnessing the setback of TV tube production, and the replacement of LCD and Plasma TVs, which has made Orion-Hanel’s difficulties more serious.
Orion-Hanel had to halt production for three months, beginning in September 2007. It resumed production in January 2008 with one production line. However, the small scale production just allowed the company to contend for three months more. In April 2008, workers were laid off indefinitely.
Since August 2007, the company has not paid social insurance for 1,700 of its labourers, 31% of whom are female workers. The total accumulative debt of the company by August 2008 reached $47mil, including $34mil worth of bank debts. The company also owes $1.9mil to labourers, and $620,000 worth of taxes.
In fact, Orion-Hanel had a chance to be rescued after the proposal of a bailout was refused by the city’s authorities. Some investors expressed interest in taking over the joint venture, including ProAM, the asset management company. The hope that Orion-Hanel would be rescued was kindled when ProAM signed an MOU with South Korea’s Orion, under which Orion agreed to sell 70% of its shares to the new investors.
However, the hope fainted. Managing Director of ProAM Le Quang Viet said that ProAM and Hanel could not reach an agreement on the asset value of the joint venture.
A source said that Hanel set the value of the land use rights of the joint venture at $11mil in accordance with the state announced land price frame at that time, a figure ProAM thought overly high. The company believed that the value of the land use rights were for 49 years, while the joint venture had occupied the spot for 15 years already.
TBKTVN
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