Thaco spends $46 million buying shares in HAGL Agrico

April 18, 2019 | 10:32
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After spending nearly $100 million on buying convertible bonds from Hoang Anh Gia Lai Agricultural JSC (HAGL Agrico), Truong Hai Auto Corporation (Thaco) has expressed interest in buying approximately 70 million shares to increase its holding in the agricultural company as per the agreement between the two parties.
thaco spends 46 million buying shares in hagl agrico
Dragon fruit is one of the major agricultural products of HAGL Agrico

Thaco has registered buying 69.7 million shares in HAGL Agrico to increase its holding from zero to 7.86 per cent. The transaction is expected to be completes between April 23 and May 22, 2019.

At present, HAGL Agrico’s shares are transacted at VND15,100 apiece, thus Thaco may pay VND1.05 trillion ($45.65 million) for the purchase.

Previously in August 2018, Thaco completed the purchase of 221,688 convertible bonds worth VND10 million ($434.8) each from HAGL Agrico for VND2.2 trillion ($95.65 million).

With the ratio of 1:1,000, Thaco can convert these bonds into 221.688 million shares after one year.

At the time, HAGL Agrico issued the plan that it would use VND1.14 trillion ($49.57 million) of the capital acquired to invest in growing banana and chili, and the remaining VND1.08 trillion ($46.96 million) to restructure its operations.

The purchase of convertible bonds and shares is part of the co-operation agreement the two parties signed in early August 2018. Accordingly, Thaco will be in charge of restructuring the entire operations of HAGL Agrico from the total funds of VND12 trillion ($521.74 million).

Besides, Thaco, through Dai Quang Minh Real Estate Investment JSC, bought a 51 per cent stake in Hoang Anh Gia Lai Myanmar Co., Ltd. and is expected to continue increasing its holdings to 65 per cent with the total investment of VND4 trillion ($173.9 million).

After the deal, Thaco and Dai Quang Minh would be in charge of developing the second phase of HAGL Myanmar with the total investment capital of $320 million, which is expected to be completed in 2020.

The co-operation between Thaco and HAGL aims to pioneer the application of 4.0 technology in the agricultural sector, while simultaneously rechanneling investment flows into the agricultural sector, expanding the playground for newcomers.

In January, HAGL Agrico issued its financial statement for the fourth quarter of 2018. Accordingly, its net revenue was VND891 billion ($38.74 million), down 38.5 per cent on-year. The net loss from the business segment was VND172 billion ($7.48 million) and other losses were estimated at VND174 billion ($7.57 million) in the fourth quarter only.

As of December 31, 2018, the total assets of the company were VND30.7 trillion ($1.33 billion), down VND1.58 trillion ($68.7 million) compared to the beginning of the year. Besides, it holds a short-term debt worth VND746 billion ($32.4 million) towards Thaco. Thus, it is likely that Thaco only needs to pay VND200 billion ($8.7 million) for the share transfer.

According to the 2019 business plan, HAGL expects to acquire VND4.77 trillion ($207.39 million) in net revenue, VND4.3 trillion ($186.96 million) of which will come from selling fruits. Besides, the company targets earning VND103 billion ($4.48 million) in pre-tax profit.

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