The firm’s (HAG) chairman Doan Nguyen Duc said its company’s board of directors already approved a plan to mobilise international capital via issuing $200 million worth of US dollar-dominated common bonds, with a five year maturity, on the Singapore Stock Exchange (SGX).
“The proceeds will be used for HAG’s rubber plantation and hydropower projects in Vietnam, Laos and Cambodia and cover the group’s operating costs,” Duc said on the HAG website.
“HAG will seek shareholders’ approval for this issuance at an extraordinary general meeting on December 23.
The issuing date will be early 2011 if approved by its shareholders.
Latham & Watkins law firm, Credit Suisse, Milbank, Tweed, Hadley & McCloy LLP, VILAF are among HAG’s bond issuance advisors.
Duc said that HAG would manage its long-term debt to equity not over 45:55. US dollar inflows in the next five years were strong enough to pay this international debt, said Duc, adding the company had the right to buy back its debts after three years of issuance.
Market analysts said HAG’s decision came as international market borrowing costs were relatively attractive after the US Federal Reserve implemented its quantitative policy to support the economic recovery. During the year to date, around $34.4 billion has found its way into emerging market bonds, compared to just $8.3 billion in 2009, while corporate international bond issuances soared to record highs in global markets.
“HAG is a favourite with foreign investors and should be able to sell its bonds,” said Ho Chi Minh City Securities Corporation’s (HSC) head of research Fiachra MacCana.
An HAG source revealed that Credit Suisse would be its bond buyer. HAG and Credit Suisse would work to decide its bond price, the source said. Credit Suisse, however, was not available for comment.
HAG’s bond issuance is to take place at a time when state-run Vinashin’s first repayment deadline of around $60 million from $600 million in international debt is approaching but whether the debt can be paid in time is still unknown.
Earlier another state-run group Vinacomin cancelled its international bond issuance plan due to few global investors’ interest.
Ho Chi Minh Stock Exchange-listed HAG anticipated a pre-tax profit of VND800 billion ($38 million) in the fourth quarter of this year and VND3.017 trillion ($143 million) in 2010, the firm said in a filing. It targets a VND3.6 trillion pre-tax profit for 2011. Foreign investors hold a 31.27 per cent stake in the listed firm, according to StoxPlus statistics.