Sudico is in hot water after the Government Inspectorate last week proposed its Nam An Khanh urban complex be put on hold due it being illegally transferred.
According to the Government Inspectorate, state-owned Song Da Corporation illegally transferred the project to Sudico before its infrastructure system was built. Ho Chi Minh City-listed Sudico (SJS) used to be a wholly state-owned member company of Song Da Corporation. Song Da Corporation held a 51 per cent stake at the time of the project transfer.
A Ministry of Construction (MoC) regulation states that projects are eligible for transactions only when its infrastructure system is finished. Moreover, the inspectorate claimed that the two sides failed to report the transaction to the prime minister and did not seek his approval for the transacted value of VND155 billion ($7.48 million) as required by law.
The Government Inspectorate suggested the prime minister assign the MoC to order Sudico stop the project’s implementation, pending further guidelines from the prime minister.
The news is a big blow to Sudico as the project’s products have already been sold to many other sub-investors.
To June 2011, more than 97,000 square metres of mixed-use land, 152,000sqm of semi-detached houses and 9,700sqm of high rise apartments were sold to customers. The company has collected VND2,600 billion ($125.6 million) for all of those sales.
Sudico is one of the 50 largest market capitalisation companies on Vietnam’s stock market. With a price of VND23,600 per share, the company has a market cap of VND2,337 billion ($112 million). Sudico’s stock fell in the days following the inspectorate’s proposal, trading at VND22,800 per share on October 26.
The company has more than 6,000 shareholders. By February 2011, Song Da Corporation held a 36.3 per cent stake, while foreign shareholders made up nearly 30 per cent. In a letter sent to its shareholders last week, Sudico deputy general director Bui Khac Vien said the transfer was in step with current laws and regulations. “I have to say that the Government Inspectorate has ignored a lot of legal documents which prove Sudico’s legal authority,” Vien said.
Sudico shifted from a state-owned firm to a shareholding company after it was equitised in 2003 when the then Ha Tay province People’s Committee decided to permit Song Da Corporation to assign Sudico to be investor for this project. According to Sudico, the assignment to let Sudico be the project investor was not a project transfer contract, but a cooperation agreement.
“On the other hand we were permitted to build this project by the Ha Tay People’s Committee, the then local authority of this project” [Hatay was merged with Hanoi in 2008]. “The amount of VND155 billion was not the transaction value, but it was the benefit Song Da Corporation receives when it signs cooperation with Sudico,” Vien said.
He added that since 2001, Sudico had fully implemented legal procedures to implement the project. Nam An Khanh new urban area is located on Thang Long Avenue in Hoai Duc district’s An Khanh commune, covering 280 hectares. It is a complex of villas, terraces, apartments, office for lease, trading centre, supermarket, entertainment centre and other public facilities.
Sudico is also the developer of a range of other urban development projects including Van La-Van Khe on Hanoi’s outskirts, the Tien Xuan urban area on the fringes of Hanoi, the Pho Noi-Hung Yen new township in Hung Yen province and Cactus Cam Ranh Resort & Spa in central Khanh Hoa province.