BIDV will auction off the VND1.265 trillion ($55 million) debt of Xuan Kien Auto JSC (Vinaxuki), which was established with the ambition to become the first Made in Vietnam car producer, but quietly slipped into losses and was shut down.
BIDV is putting up Vinaxuki for auction to recover its debts. Source: zing.vn
BIDV has just announced plans to auction off Vinaxuki and Thai Nguyen Vinaxuki Motor Co., Ltd.'s debts, which were taken up to support Vinaxuki and its factory in Thai Nguyen to manufacture “Made in Vietnam” cars and trucks in the past years.
The reserve price of the debt has yet to be disclosed by the bank, however, as of last September, the sum of the debt and interest was VND1.265 trillion ($55 million).
The loan has secured assets including a land lot and attached assets in Tien Phong commune, Me Linh district, Hanoi with a total area of 138.8 square metres, where a Vinaxuki factory is located.
In addition, the machinery and equipment at Vinaxuki Me Linh factory, the right to exploit Antimony ore mines, and the ore sorting line in Dak Drong commune, Cu Jut district, Dak Nong, as well as the assets attached to the land of Vinaxuki Thai Nguyen factory are also pledged for the debt.
Organisations eligible for bidding at the auction are those operating for a minimum of three years and having at least three branches, with a head office in either Hanoi or Ho Chi Minh City.
Vinaxuki was a Vietnamese carmaker headquartered in Hanoi, Vietnam. Established in 2004, the company manufactured and assembled cars and mini trucks under its own brand name. Since it was established, Vinaxuki has launched 38 truck models, two semi-truck models, two touring car models, and two coach models.
The company has built a factory in Me Linh district with a capacity of 20,000 vehicles per year. In 2006-2008, Vinaxuki produced over 20 types of trucks with a localisation rate of 27 per cent and three types of passenger cars with a localisation rate of 5 per cent.
In these years, the plant's operations were profitable. During the first three years of operation, Vinaxuki has completely recovered its capital and began repaying debts to the bank.
Vinaxuki continued to invest in construction with the ambitions of increasing its localisation rate. However, the economic downturn in 2010 caused the automobile market to plunge. Thousands of vehicles were assembled but could not be sold.
The company was starved of capital, while the fiercely competitive market went into stagnation. In the following years, Vinaxuki operations revolved around interest and debt repayment.
Vinaxuki's factories were originally designed with an estimated workforce of 6,000 people (300 in Thai Nguyen, 3,000 in Thanh Hoa, and the rest in Me Linh, Hanoi). However, all factories stopped production since 2013. At the end of 2017, Vinaxuki's Thanh Hoa factory was recovered by the bank and sold to cover its debts.
By Thang Duong