Vinatex unravels its business positions

After selling stake in Dong A Textile Garment in mid 2012, Vinatex mulled divesting from Saigon-Quang Ngai Brewery and Gia Lam Mechanical Garment.

Accordingly, Vinatex’s entire stake at these two businesses will be auctioned at Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange on December 28, 2012.

The move comes as Vinatex is starved of capital to inject into core businesses like garment and textile dyeing. Vinatex’s over 1.6 million shares at the Saigon-Quang Ngai Brewery which has VND450 billion ($21.4 million) in chartered capital in which Vinatex holds less than 4 per cent will be offered at VND10,000 per share starting price whereas 20,700 shares worth VND100,000 ($4.7) in the face value at Gia Lam Mechanical Garment offered at VND170,000 ($8) per unit.

Vinatex retains 30 per cent stake at Gia Lam Mechanical Garment which reported VND6.9 billion ($330,000) in chartered capital.

In the context of a lackluster stock market, Vinatex’s continual divestiture commitments showcased the group’s strong determination for business restructuring to scale up its capital usage efficiency.

In 2013, the group managed to take back capital from one security business, seven banks and the remaining fields which were viewed as challenging tasks as no bright signs for a better future are seen in the horizon.

Senior economic expert Pham Chi Lan said the only way to speed up divesture commitments would be selling stakes at bargain prices, making the target of ensuring state capital high investment efficiency hardly achievable.

Vinatex’s current situation is common to diverse other state groups.

Vinatex’s deputy director Le Tien Truong said the target of preserving state capital investment efficiency has slowed down the group’s divestiture pace.
In late May 2012, Vinatex put into auction its over 1.4 million shares at Dong A Textile Garment with VND20,000 per unit in starting price.
However, only more than a half of the shares found owners.

Compared to other state group, the capital portion Vinatex pumped into non-core businesses remains minuscule at around VND259 billion ($12.3 million). The group is holding 100 per cent chartered capital in four companies, 50 per cent stakes in 13 firms and less than 50 per cent shares in 48 other units.

“Despite facing mounting hardships, Vinatex will try its best to finalise divestiture commitments before December 31, 2012 pursuant to prime minister approved state owned enterprises restructuring plan via Decision 929/QD-TTg of July 17, 2012,” said Truong.