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MoC proposes equitization plan for Song Da

Released at: 08:46, 26/09/2016

MoC proposes equitization plan for Song Da

Photo: Duc Anh

State to retain 51% post-equitization and 36% by 2020.

by Duy Anh

The Ministry of Construction (MoC) has proposed an equitization plan for the Song Da Corporation, with the State to retain a 51 per cent of stake after equitizing and 36 per cent by 2020, via a statement submitted to the Prime Minster.

The ministry has proposed divesting the State’s holdings after Song Da was identified as one of MoC’s ineffective enterprises in recent times.

Song Da will issue 450 million shares with an initial price of VND10,000 ($0.45). It expects to earn VND2.89 trillion ($129.7 million) in revenue and VND160 billion ($7.2 million) in pre-tax profit in 2016 after the sale.

Staff will hold 0.18 per cent, 30 per cent will be sold to strategic investors, and 18.82 per cent will be publicly offered.

The criteria for strategic investors is to register to purchase at least 5 per cent of the 30 per cent set aside, or VND225 billion ($10.08 million), and be able to meet requirements in financial capacity and have prestige and branding in the market.  

Candidates must have total assets of at least VND1 trillion ($44.9 million) as at 2015 and equity of VND300 billion ($13.5 million), and must be profitable and not saddled with bad debts.

Song Da’s equitization will take place at a time of massive losses. According to its financial report, debts of VND10.2 trillion ($457.6 million) far outweighed equity of VND2.6 trillion ($116.7 million) as at the end of 2015.

Its valuation is VND18.5 trillion ($829.54 million), of which the State holding is VND4.43 trillion ($198.64 million).

Song Da accounts for 85 per cent of Vietnam’s hydroelectricity plant construction market. Not only is it the biggest contractor, it also leads in human resources, technical specialization, and machinery in the market.

“The State needs to retain its holding in and control of the enterprise”, the statement said.

It was set to launch an IPO in July but was forced to delay due to unforeseen circumstances.

According to MoC there were a range of difficulties in valuating Song Da due to its large size and projects, factories and assets in Vietnam and overseas.

Established in 1961, Song Da Corporation specializes in developing thermal power plants, traffic infrastructure, industrial factories, and real estate projects as well as manufacturing construction materials.

It is the major contractor of most thermal power plants in Vietnam, including Son La, Hoa Binh, and Lai Chau. It has expanded its operations to Laos through developing the Xekaman 1 and 3 thermal power plants.

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