Fecon stops stake sale to Chinese partner

September 15, 2020 | 17:47

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Fecon Corporation – one of the biggest underground construction contractors in Vietnam – has cancelled negotiations with Chinese investor China Harbour Engineering Co., Ltd. (CHEC) about selling 32 million individual stocks.

Instead of the Chinese partner, Fecon will continue to look for potential strategic investors for the stocks.

Previously, at the annual shareholders' meeting in June, its shareholders approved the plan to issue 32 million individual shares to strategic investors with the expectation to acquire at least VND480 billion ($20.87 million) at the unit price of VND15,000 (65 US cents).

The purpose of this stake sale is to increase the equity and financial capacity and scale. Notably, the company would contribute VND278 billion ($12.1 million) to four subsidiaries and would add the remaining VND202 billion ($8.8 million) to the group’s liquid capital.

According to the initial plan, this stake was to be offered to CHEC, which has similar operations to Fecon. The deal was expected to be completed in the fourth quarter of this year.

However, most recently, Fecon has stopped negotiations with the Chinese partner without disclosing the reason.

Raito Kogyo Group from Japan is a strategic partner of Fecon after buying 19.5 million shares, equal to a 17.13 per cent stake in last April.

The shares were converted from two lots of convertible bonds that Raito Kogyo had bought from Japan South East Asia Growth Fund (JSEAG), a member of the Development Bank of Japan (DBJ).

JSEAG bought the convertible bonds from Fecon in 2016 at a total value of VND500 billion ($21.74 million).

By Ha Vy

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