VietNamNet Bridge – About 20 percent of Vietnamese cement enterprises have
been put on the brink of bankruptcy. The solution they most think of now is to
sell themselves to foreign investors who would pump money to clear debts and
restructure enterprises.
Do Duc Oanh, Secretary General of the Vietnam Cement Association, said only 50
percent of cement manufacturers still can exist in the current difficulties, 30
percent are facing big difficulties, while the other 20 percent are on the verge
of bankruptcy.
Oanh said that restructuring cement enterprises is the only way out for them
now. However, domestic enterprises are not capable enough to restructure
themselves or pour money into others. Therefore, the enterprises have been
seeking foreign buyers.
The State, as the owner of some cement enterprises, has requested some “big
guys” to buy the unprofitable cement plants. However, the “big guys” themselves
are not financially capable enough to buy stakes, once they themselves are
meeting big difficulties due to the big inventories.
The Vietnam Cement Corporation (Vicem), for example, doesn’t have money to buy
the Cam Pha and Ha Long Cement Plants. Therefore, Oanh said, the merger and
acquisition (MA) deals, if they occur, would be between the unprofitable cement
plants and foreign partners.
According to the Vietnam Association of Financial Investors (VAFI), some 10 MA
deals have taken place over the last 3 years in the cement industry. The
enterprises with the bad corporate governance skill and big debts, which were in
the danger, had to be sold to the strategic investors with higher financial
capability and better management skills.
Also according to VAFI, foreign investors from ASEAN have shown their interest
in the Vietnamese cement industry. They were the buyers in some latest MA
deals.
“The foreign investors bought the majority stakes of the domestic cement
companies through the chartered capital increase, or bought back the stakes from
the owners,” a report of VAFI reads.
In late 2012, an Indonesian cement group spent VND4.8 trillion to buy stakes to
become the strategic shareholder of Thang Long Cement Company.
The Vietnam Construction and Import-Export Corporation (Vinaconex), is
reportedly considering selling its 70 percent of stakes in Cam Pha Cement
Company to foreigners.
Having to pay the huge debt of VND2.4 trillion for Cam Pha, Vinaconex has been
meeting big financial difficulties and incurred the loss of VND646 billion in
2012.
A source has revealed that two foreign cement groups have shown their interest
in Cam Pha. They have sent letters suggesting the cooperation in the capital
restructuring of the cement manufacturer.
The foreign partners have affirmed they are willing to pump capital into the
company immediately to pay debts, and pay foreign debts before due.
VAFI believes that it would be a good solution to sell cement companies to
foreigners, because this would help settle the bad debts worth billions of
dollars, not only in the cement manufacturing sector, but in many other business
fields.
Especially, the presence of foreign investors in Vietnamese cement enterprises
would lead to the expansion of the export markets. VAFI has estimated that
Vietnam can export 10 million tons a year more in the time to come.
However, some experts have expressed their worry that Vietnamese enterprises in
many key business fields would fall into the hands of foreigners, if they can
buy Vietnamese enterprises cheaply.
VNE