Gemadept rescues stalled deal

Gemadept general director Pham Tien Tinh told Vietnam Investment Review last week that his company had paid $6 million for the 45 per cent stake, which was owned by the Hong Kong-backed Keangnam Enterprise, including taxes, discounts and deductions from previous years.
“The Ministry of Planning and Investment and municipal authorities approved the deal,” he said, adding that the price of the buy-out was much lower than the investment capital Keangnam had invested in the Le Loi Plaza project.
Tinh said he and other Gemadept executives believed that as a local firm they would be able to run the project successfully, as the country’s property market has been growing well.
The company has transferred the first tranche of $1 million to Keangnam for the purchase and will pay the remainder in the near future.
The Le Loi Plaza project was licensed in the mid-1990s as a joint venture between Keangnam Enterprise and the state-run Ben Thanh Corporation (Sunimex). It was to develop a 23-storey office building in the corner of Le Loi and Nam Ky Khoi Nghia Streets in Ho Chi Minh City’s District 1.
The partners were forced to postpone construction following the Asian economic crisis in 1997.
“The long-delayed project will go ahead after the transfer. Construction of the project is expected to resume this year after adjustments to the project’s design are complete,” Tinh said.
To suit the current property market, he said the project’s design would be adjusted to 25-33 storeys, half of which would be serviced apartments for lease and sale, instead just 22 office storeys as originally designed.
The building will cost an estimated $30 million to construct. Gemadept will hold a 45 per cent stake while Sunimex and two other local partners will contribute the remaining 55 per cent.
Apart from the Le Loi Plaza project, Gemadept is planning to construct another high-rise building in Ho Chi Minh City this year, the Marine Trade Promotion Centre.
“The design of the building has been approved. Construction on the 25-storey building at 4-6 Le Thanh Ton Street in the city centre will begin earlier than Le Loi Plaza building,” he said.