PVC begins divestment drive

PetroVietnam Construction announced plans to withdraw capital from 13 listed companies

The order-matching price for each share will meet the market price at the moment of sale but it must not be lower than the share value when Petro Vietnam Construction or PVC (coded PVX) invested in the company. The divestment will begin from March 10 and run until December 31, 2015.

The corporation has contributed trillions of dong to the 13 companies, but many of them have reported losses for many consecutive years.

Noticeably, two companies managed consecutive losses running over three years - PVC-Saigon (coded PSG) racked up three year total losses of VND547 billion ($26 million) for 2011-2013, exceeding the charter capital of VND350 billion ($16.6 million) and PVC-Nghe An (PVA) booked a loss of VN175 billion ($8.3 million).

Several other companies ignominiously achieved losses over 2012 and 2013 such as PVC-PetroLand (PTL) which recorded total losses of nearly VND140 billion ($6.7 million); Vinaconex-PVC (PVV) with a two year losses of VND105 billion ($5 million) and PVC-Dong Do (PFL) with a loss of VND100 billion ($4.8 million).

Most shares on the divested list are now worth less than par value of VND10,000 ($0.47) per share. Therefore, it will prove difficult for PVC to withdraw capital from these companies at prices not lower than when they bought them.

The PVC board also approved a plan to divest from unlisted Ha Long Cement JSC and PetroVietnam - SSG Real Estate JSC at market price, but not lower than the par value of VND10,000 per share.

PVC’s member companies have suffered losses over the past three years which has negatively affected the business results of the mother company due to the difficult economic situation and struggling real estate market.

In 2013, PVC achieved a net revenue of VND5,096 billion ($242.6 million), up 14 per cent year-on-year, but it still saw a net loss of VND2.6 trillion ($123.8 million), double that of 2012.

 As of 2013, the corporation’s short-term loans rose to VND12,113 billion ($577 million) which exceeded its short term assets of VND10,875 billion ($518 million). Cumulative losses reached VND3,342 billion ($159 million), while its equity remained at just VND808 billion ($38.47 million), much lower than the initial investment capital of VND4 trillion ($190 million).