Confectioner to become major shareholder of bank if plans proceed for it to buy 100 million shares.
Dong A Bank is seeking shareholders’ approval to sell 100 million shares in a new issuance to confectionary firm the Kinh Do Corp. to increase its charter capital from VND5 trillion ($229.2 million) to VND6 trillion ($275.1 million), according to a bank report sent to shareholders.
“After a period of negotiation Dong A Bank recognizes that Kinh Do Corp. meets all the legal requirements to become our strategic investor,” Mr. Tran Phuong Binh, CEO of Dong A Bank, wrote in the report. “Kinh Do is also committed to buying all the shares in the issuance.”
The shares are expected to be sold in a single session in the third quarter of this year with transfer restrictions for one year from the date of issuance.
If the plan is approved at Dong A Bank’s annual shareholder meeting on July 21 Kinh Do will become the largest shareholder in the bank, owning approximately 17 per cent.
Dong A Bank targets to record VND200 billion ($9.1 million) in profit before tax this year, much higher than the VND35 billion ($1.6 million) it recorded in 2014.
Founded in 1993, Kinh Do Corp. is Vietnam’s largest confectionary company by both sales and production value. In 2014 it recorded VND4.95 trillion ($226.9 million) in revenue, profit before tax of VND600 billion ($27.5 million), and profit after tax of VND537 billion ($24.6 million).