The Board of Directors of Parkson Retail Asia Ltd., together with its subsidiaries, announced on April 28 that Parkson Vietnam Co., an indirect wholly owned subsidiary of the company, filed an application to the People’s Court of Ho Chi Minh City for the commencement of voluntary bankruptcy proceedings.
This decision was made by Parkson Retail Asia Ltd. after nearly 20 years of operations in Vietnam. The company has built a total of eight centres, but only one is currently in operation, the Parkson Saigontourist Plaza located on Le Thanh Ton Street, District 1, Ho Chi Minh City.
|Parkson Retail Asia Ltd. filed an application to the People’s Court of Ho Chi Minh City for the commencement of voluntary bankruptcy proceedings on April 28. Photo: Le Toan
According to Parkson Retail Asia’s announcement, Parkson Vietnam has historically been operating at a loss, with the issue being compounded lately due to the challenging business environment.
“As such, the group has assessed and determined that it is not commercially feasible to continue its operations in Vietnam and the Board of Directors for Parkson Vietnam has decided that it will be in the best interests of Parkson Vietnam to file the application,” it added.
|“In particular, the lack of support from Parkson Vietnam’s landlord, such as the negligible rental rebate and reduction during the lockdown period when the operation of Parkson Vietnam’s stores was restricted, had adversely impacted the company's financials. The high land tax imposed by the local government also added to the financial difficulties,” claimed Parkson Retail Asia.
This is in line with the group’s focus on its operations in Malaysia, where the group remains optimistic about the overall market prospects with improving consumer sentiment and increasing numbers of foreign tourists.
The application is, however, subject to approval from the relevant authorities in Vietnam. The company will only be able to determine the exact financial impact of the voluntary bankruptcy of Parkson Vietnam on the consolidated net tangible assets per share and earnings per share of the group for the current financial year ending December 31 upon the grant of the application.
Under Vietnamese law, the liabilities of Parkson Vietnam will remain with and be limited to Parkson Vietnam and do not extend to the company, its other subsidiaries, or its holding companies, Parkson claimed.
The group's maximum potential exposure resulting from the voluntary bankruptcy of Parkson Vietnam will therefore be limited to its capital contributions to Parkson Vietnam. The company has recognised full loss of these contributions in its audited financial statements.
Going forward, the group will continue to enhance its operational efficiencies and cost improvement strategies, as well as identify new sites with the potential for opening new outlets in Malaysia.
Parkson Retail Asia is listed on the Singapore Stock Exchange and is a company in which Parkson Holdings Bhd (Malaysia) holds a 67.96 per cent stake.
On the afternoon of April 28, stores inside Parkson on Le Thanh Ton street, Ho Chi Minh City were still operating normally. Their salesmen said that they have not yet received any information about Parkson's bankruptcy application.
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