By JAMES HOOKWAY And DITAS LOPEZ
Vietnam's beleaguered state-run shipbuilder Vinashin Monday said it hasn't yet reached a deal with creditors to delay a $60 million debt repayment, threatening a run-in with global lenders that could further erode Vietnam's financial reputation after a series of credit-rating downgrades.
Company chairman Nguyen Ngoc Su told state-owned Vietnam News Agency that the firm was in a difficult position and doesn't have enough money to make the first repayment of principal?due Monday?on a $600 million syndicated loan it took out in 2007.
"At the moment, Vinashin is trying to negotiate with the creditors for very flexible measures to deal with the debt," Mr. Su was reported as saying.
Some of Vinashin's creditors, meanwhile, are seeking a commitment from the government that it won't let the firm fail, says a person familiar with discussions on how to manage the company's debt?a demand that leaves Vietnam's government in a difficult position as it attempts to tighten up spending at many of the country's laxly-supervised state-owned enterprises.
Vinashin, formally known as Vietnam Shipbuilding Industry Group, was among a series of state-owned conglomerates that expanded rapidly in recent years in a government-led effort to keep key sectors of the Vietnamese government in state hands. Vinashin's stated goal was to emerge as a heavyweight player in the global shipbuilding business, and it also diversified into a range of other businesses, including brewing and property development. In 2005 the company was the sole recipient of the proceeds from Vietnam's maiden $750 million sovereign-bond issue.
The global financial crisis hit the company hard as clients canceled billions of dollars in orders, leaving the company on the brink of collapse this summer with around $4.4 billion in debts. In August, former Vinashin chairman Pham Thanh Binh and several other executives were arrested for breaking government rules about the management of state-run enterprises and attempting to mask the extent of the company's financial problems.
Now management and some creditors are attempting to find a way to agree on a deferment of the $600 million syndicated loan, which was arranged by Credit Suisse, but so far Vinashin officials say the creditors haven't yet agreed to a deal enabling the shipbuilder to delay its repayment schedule.
People familiar with the situation say Vinashin has a three-day grace period before entering default?an event which could potentially speed up demands for repayment of Vinashin's other debts and also worsen the economic situation in Vietnam, which is facing rising inflation and is battling a sliding currency.
Moody's Investors Service last week downgraded Vietnamese government debt to B1 from Ba3, partly because of Vinashin's problems, and warned that a default would crimp Vietnam's ability to raise funds overseas. That downgrade followed Fitch Ratings's move to cut Vietnam's sovereign-credit rating earlier this year.
Missing a payment, analysts say, would make it difficult for Vietnam to finance the construction of new infrastructure which the Communist-run state badly needs to maintain its long-term economic growth and also increase pressure on the government to support Vinashin. Over the next decade Hanoi is planning to spend $150 billion improving the country's infrastructure?and Vietnam's leaders had been considering tapping international financial markets to finance some of that sum.
So far, political leaders in Hanoi have helped the restructuring of Vinashin by spinning off parts of the company to other state enterprises, but government officials also are wary of using state funds to effectively bail out the debt-stricken shipbuilder, say people familiar with their thinking.
"Some of the leaders want to show that they are serious about reforming the state sector and that by refusing to aid Vinashin they are sending a message about how they won't tolerate moral hazard," says one person familiar with some of the policy debates underway in Vietnam and who asked to remain anonymous. "They are running out of time, though."
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured site: So, Why is Wikileaks a Good Thing Again?.
No comments:
Post a Comment