In a recent letter to shareholders, Thai Nguyen Iron and Steel Jsc (TISCO) said it is facing "a financial crisis which could lead to bankruptcy if it is not saved by the government, banks and other authorities."

The charter capital of the company, one of the largest steel producers in Vietnam, was VND1.94 trillion ($83.6 million) last year but owner’s equity accounted for only 18 percent, which the company regards as a low ratio.

With liabilities 4.65 times owner’s equity, TISCO said its capital structure is unstable.

The company added it needs to increase owner’s equity and recover bad debts. The bad debts climbed to almost VND852 billion ($36.7 million) last year, of which the company said 46 percent could be recovered.

One of the problems the company has been facing is the delay in a stop-start expansion project. The Government Inspectorate has listed it among 12 state-owned projects suffering major losses and with many violations of the law.

The project first began in 2007 but stalled soon afterwards due to the global economic crisis. The original cost of expansion of VND3.84 trillion ($165.5 million) was increased to over VND8.1 trillion ($349 million) on the suggestion of Chinese contractors when it was restarted in 2009.

But in 2012 it stalled again when TISCO faced a resources crunch, causing the China Metallurgical Group Corporation (MCC) to withdraw from the project.

TISCO had paid MCC 92 percent of the contract value at the time, but much of the work was left incomplete, according to the Government Inspectorate.

Machinery and equipment MCC delivered had rusted and become damaged after lying unused for long, the inspectors said.

The government prohibited further investment of public funds in the company in 2016. Following this, sovereign wealth fund State Capital Investment Corporation (SCIC) pulled out its capital of VND1 trillion ($43.1 million) from the company.

Following the long expansion delay, banks have slashed TISCO’s credit ratings and increased interest rates to 8 percent a year, worsening the situation.

The company board said despite its petitions to authorities for a solution no progress has been made.