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VRG equitization plan given green light

Released at: 21:41, 28/12/2017

VRG equitization plan given green light

Photo: VNA

Foreign strategic investors excluded from sale of Vietnam Rubber Group shares.

by Quang Huy

Deputy Prime Minister Vuong Dinh Hue has approved the equitization plan of the State-owned Vietnam Rubber Group (VRG), under which more than 11 per cent of charter capital is earmarked for domestic strategic partners.

Of VRG’s VND40 trillion ($1.76 billion) in charter capital, the State will retain 75 per cent, or 3 billion shares. Of the remainder, more than 475 million shares, or 11.8 per cent of charter capital, will be sold through a public auction, while another 11.8 per cent will be sold exclusively to domestic strategic partners. Some 1.22 per cent, or nearly 49 million shares, will be sold to current employees and 0.02 per cent to members of VRG’s trade union.

The starting price at the public auction is set at VND13,000 ($0.59) apiece and the Ministry of Agriculture and Rural Development (MARD) will act as the State’s representative in the sale.

The Prime Minister authorized the agriculture minister to approve the selection criteria and be responsible for choosing the group’s domestic strategic partners after finalizing the public auction.

The strategic partners must hold VRG shares for at least five years and the State will have priority in buying back the shares if the strategic partners decide to sell.

Earlier, in November, the Prime Minister approved VRG’s five-year production and business plan for 2016-2020. It targets achieving average annual growth of 18 per cent during the period, with total revenue surpassing VND40 trillion ($1.76 billion) and profit in the range of VND9 trillion ($409 million) by 2020.

During 2016-2020, VRG aims to effectively exploit its existing industrial parks (IPs), engage in second-phase IP expansion at favorable locations, and turn about 5,000 ha of land in areas with good transport and close proximity to water resources into high-tech agricultural production zones, with revenue surpassing VND1 trillion ($45 million) by 2020.

Its initial public offering (IPO), which was scheduled for last July, was delayed due to the government’s request that the company be audited by State Audit of Vietnam (SAV). “The delay was to ensure that State capital in the company was protected,” Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said, adding that the 420,000 ha of land VRG has in Vietnam, Laos, and Cambodia could be a huge advantage and highly profitable in the future.

Last year, VRG successfully sold stakes in two of its subsidiaries and divested from 24 non-trading units, collecting more than VND2.9 trillion ($127.6 million) in return. It has targeted earning VND4.2 trillion ($184.8 million) in pre-tax profits this year, a year-on-year increase of 47 per cent, despite industry forecasts of challenges due to the unpredictable impacts of climate change.

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