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Vietnam shipbuilder can't make debt payment
Vietnam's beleaguered state-run shipbuilding company does not have enough money to make a $60 million loan payment next week, and has asked foreign creditors for more time to pay, state-run media reported Tuesday.
Nguyen Ngoc Su, Chair of the Vietnam Shipbuilding Industry Group, is quoted in the online newspaper VietnamNet as saying that he informed creditors on Dec. 10 that it will be impossible for the company to make the first repayment of principal due Dec. 20 on a $600 million loan from a group of creditors led by Credit Suisse.
"If Vinashin is cornered to default or go bankrupt, creditors of the $600 million will not collect a penny," Su said. "Both sides will lose. That's reality, there's no alternative. Generally speaking, we are of the view that the banks should not use tough measures on Vinashin during this very difficult situation."
The government has said the company, one of Vietnam's largest known as Vinashin, is responsible for paying its own debts.
The shipbuilding conglomerate was established in 1996, and the Communist government had high hopes that it would become one of the world's top shipbuilders while serving as an example of the country's new success as it opened up to foreign investment and trade.
But by earlier this year, Vinashin was teetering on the edge of bankruptcy. Last month, Prime Minister Nguyen Tan Dung told the National Assembly that corporate malfeasance and the company's vast expansion into areas outside shipbuilding - everything from animal feed production to tourist resorts - had left it with huge debts estimated as of June at $4.5 billion (86 trillion dong) or about 4.5 percent of the country's gross domestic product last year.
The company is currently being restructured under new management after seven senior executives, including Chairman Pham Thanh Binh, were arrested earlier this year for alleged mismanagement after Vinashin's financial woes surfaced.
Ratings agency Standard & Poor's said Monday that Vinashin's problems would likely undermine the credit quality of the country's banks.
"Vinashin's woes highlight the lack of transparency, weak accountability and poor corporate governance in Vietnam, which is still in the early stages of transitioning from a centrally planned to a market-based economy," S&P credit analyst Ivan Tan said in the statement.
He said Vietnam's state-owned companies make up about 40 percent of the country's gross domestic product, and that Vinashin has cast a cloud of uncertainly over the likelihood of a government bailout.
Senior Vietnamese economist Le Dang Doanh said Tuesday that Vinashin should try to make some payment and then ask creditors for an extension for the remaining debts, instead of trying to take a hard-handed approach to attempt to pressure creditors into giving the company more time.
"The whole country will have to pay a price for Vinashin's problems in terms of credit quality," he said. "The country has already paid the price. They (The ratings companies) have downgraded, and they will make further downgrades."
AP
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