TIS's current liabilities have now exceeded its current assets. Photo: ST

Drowning in losses and debt

In the semi-annual financial statement of 2022 of Vietnam Shipping and Chartering Joint Stock Company (VST), the auditor showed that, as of June 30, 2022, VST's short-term debt was in excess of short-term assets with an amount of VND1,886 billion, accumulated loss was VND2,363 billion, and negative equity target was VND1,717 billion.

At the same time, overdue loans amounted to VND554 billion; Short-term payables and interest expenses for these overdue loans were VND1,210 billion.

On the other hand, the company is struggling to map an effective plan to overcome its solvency as well as find a source of money to pay for loans due within the next 12 months under normal operating conditions.

In addition, VST is also facing lawsuits from banks about payment delay of immediate loans. According to the auditor, this is an reason for significant doubt on VST's survival.

The 2022 semi-annual review financial report of An Giang Seafood Import-Export Joint Stock Company (AGF) also acknowledges the opinion of the audit unit on the company's ability to maintain operations.

Accordingly, as of June 30, 2022, the company's accumulated loss was VND859 billion, short-term debt was exceeding short-term assets by VND375 billion, equity was negative VND165 billion, resulting business in the period recorded a loss of nearly VND12 billion.

Similarly, the accumulated loss at the end of June 2022 of Vinaconex 39 Joint Stock Company (PVV) also amounted to nearly VND368 billion, exceeding the charter capital and making the equity negative about VND43 billion.

Regarding debt, PVV's short-term debt balance has exceeded its short-term assets by about VND275 billion, overdue bank loans have not been paid by nearly VND223 billion. In addition, capital contributions to the implementation of investment cooperation contracts are behind schedule with the amount of about VND194 billion.

In the first 6 months of 2022, PVV's consolidated business results recorded a constant loss of nearly VND13 billion. These issues raised concerns about PVV's ability to continue operating over the next 12 months. According to the auditor, the company's endurance depends on the recovery of receivables, overdue investments and settlement of unfinished works to recover debts as well as the ability to generate profits in the future.

Ha Tay Trading Joint Stock Company (HTT) also had an accumulated loss of up to VND60 billion as of June 30, 2022; Short-term liabilities are exceeding short-term assets by VND54.7 billion. The company is short of working capital to pay its due debts. The company's overdue debts as of June 30, 2022 are mainly the balance of state budget debt of VND15 billion, principal of a bank loan of VND30 billion, and the estimated interest payable on bank loans of VND15 billion and other payable debts.

As a result, the auditor casts raised questions about the survival of the company. HTT's ability to survive depends on plans to recover debts, restructure investments, complete and finalize unfinished works to recover money, financial support from shareholders and creditors.

The doubted list of audited enterprises also includes names such as Thai Nguyen Iron and Steel Joint Stock Company (TIS), Construction Engineering Corporation (TCK).

Accordingly, these enterprises all have short-term loans that exceed short-term assets. TCK alone also had a loss in business results in the first 6 months of 2022, negative net cash flow from business activities and accumulated losses of more than VND300 billion, leading to an equity deficit of more than VND300 billion.

In response to the auditor's opinion on the ability to continue operation, VST had a document to present solutions. Specifically, the company will take advantage of market recovery opportunities to sign ship charter and crew hire contracts in a profitable way, and at the same time strengthen cost control to improve business results.

The company will also focus on implementing the Resolution of the General Meeting of Shareholders in 2022. Especially solutions enabling to reduce losses and maintaining production and business activities in general as well as the Vintranschart fleet in particular are fully paid attention, including solutions on business - market, financial management, financial restructuring, revenue increase and cost reduction, fleet technical management enhancement.

With these solutions, according to Mr. Trinh Huu Luong, General Director Director of VST, the company will get back on the right track in the near future.

AGF management said that the company is in the process of restructuring its business, including liquidating some investments. Specifically, the company is downsizing its farming scale to match the consumer market, renting out unused farming areas to reduce costs, increase revenue and ensure cash flow. Along with that, pangasius fillet processing services for export is implemented at processing factories in order to stabilize revenue, cash flow and fulfill debt and interest repayment obligations with credit institutions and secure workers. The company also agreed with banks to ensure working capital for production and business activities.

Meanwhile, PVV's management said that for the company's receivables submitted to the Vietnam Oil and Gas Construction Corporation, Nam Cuong Group and other investors, the company is actively working with the investor, general contractor and subcontractors to finalize the work.

Due to many changes in project implementation personnel from the investor and the general contractor, the adjusted total estimate has not been approved to serve the settlement work.

After finalizing the project, the investor will finalize the value of debts to Vinaconex 39. PVV's management confirmed that it is monitoring and actively collecting the above debts and urgently complete the settlement documents and recover debts of projects according to the set plan.

According to HTT's explanation, short-term liabilities of the company are mainly loans from banks, principal and interest plus tax payable to the State. As for the tax amount, in the first 6 months of 2021, the company paid nearly VND494 million to the State in order to put the company's production and business activities on the right trajectory.

For loans, the company said that all loans at credit institutions are secured by real estate. The company is working with banks to completely settle the above debts in 2022.