TEDI workers may assume a majority stake

Transport Engineering Design Inc. (TEDI) has proposed to the Ministry of Transport (MOT) a plan for its state-owned stake divestment, to be carried out on or before November 30. TEDI’s divestment plan is rather distinctive, as the enterprise’s employees will possibly become the company’s biggest stakeholders.

TEDI is one of the five enterprises operating under the MOT that have been given a go-ahead for divestment. The other four are Vinacomin Waterway Transport JSC, Cienco 5 (Civil Engineering Construction Corporation No.5 JSC), Cienco 6, and Cienco 8.

TEDI has offered to sell its entire 3.6 million shares, equivalent to 29 per cent of the company’s chartered capital. The share’s par value has been set at VND10,000 ($0.46) and the starting price is VND16,705 ($0.77) per share.

The representatives of the state-owned stakes at TEDI suggested to sell 30 per cent of state-owned stakes through auction in batches, while the remaining 70 per cent of stakes would be sold upon negotiation with the company’s employees, based on a price obtained upon completion of the auction.

“There will be around 2.53 million shares set aside for our skilled and long-term employees,” said Bui Doan Toan, chairman of the Board of Management at TEDI.

TEDI officially became a joint-stock company in June, with a chartered capital of VND125 billion ($5.6 million). TEDI’s capital structure is comprised of the MOT’s 29 per cent contribution, 25.76 per cent from Foundation Engineering and Underground Construction JSC (FECON), 15.4 per cent from Tokyo-based Oriental Consultants Co. Ltd. (OC), and the rest from TEDI’s employees, union, and other small shareholders.

If TEDI’s employees are determined to acquire the state-owned stakes on offer, their combined stake could add up to almost 50 per cent of the total chartered capital, making them the largest shareholders of the company.

FECON and OC are also eligible to partake in the stake auction at the Hanoi Stock Exchange, in an auctioning session that is expected to take place in the middle of October.

According to Toan, fully divesting state-owned holdings could help the company restructure comprehensively, as well as allow it to set foot in the construction market that TEDI was previously excluded from under the MOT.

“Once TEDI has successfully divested state-owned stakes, the company will then be allowed to participate in any auctions of foreign invested projects, in accordance with regulations of international credit institutions,” Toan said.

As for the state, letting go of the 29 per cent stake at TEDI will bring in at least VND60 billion ($2.79 million) – a substantial amount that could be invested in other crucial projects.

According to TEDI’s leaders, once the proposal is approved, the company’s employees will benefit the most, as they can take part in the company’s management. For a consulting firm like TEDI, high-skilled employees are the most important factor to facilitate the company’s stable and sustainable growth in the future.

TEDI’s expected dividend in the first year, however, is likely to be quite low, at around 10 per cent of its profit.

“For a consulting firm like TEDI, dividends aren’t everything. What investors are interested in is the company’s brand name, which has been derived from our consulting engineers. Retaining our employees by offering them a chance to become the owners of the company is our solution,” said Pham Huu Son, TEDI general director.