Binh Duong Business and Development (TDC) issues 35 million shares to pay off debt.

Binh Duong Business and Development (TDC) issues 35 million shares to pay off debt.

Binh Duong Trading and Development Joint Stock Company (Code: TDC) is a member of Becamex IDC, a unit specializing in real estate investment and business, construction, and the production and trading of construction materials...

Recently, TDC's shareholders approved a plan to issue shares to raise funds to repay bonds that are about to mature.

Specifically, Binh Duong Business and Development will issue 35 million TDC shares. The offering price will be determined by the Board of Directors but will not be lower than VND 10,000 per share. The offering is expected to be implemented from Q4 2024 to Q1 2025. The offered shares will be subject to a one-year transfer restriction from the date the offering ends.

Binh Duong Business and Development Corporation (TDC) issues 35 million shares to pay off debt (Photo: Provided)

The funds raised from the offering will be used to repurchase a portion of the TDC.BOND.700.2020 bond issue before maturity.

This is an unsecured bond issued on November 9, 2020, with an expected maturity date of November 15, 2025. The total face value of the bond issue is VND 700 billion. At the time of issuance, the purpose of raising capital through bonds was to pay dividends and late dividend interest to the parent company, Becamex IDC Corporation.

TDC avoids losses in Q2 thanks to financial revenue.

Regarding business operations, in Q2/2024, Binh Duong Business and Development recorded revenue of VND 115 billion, a decrease of 14.2% compared to the previous year. High cost of goods sold resulted in a gross profit of only VND 1.1 billion, a decrease of 3% compared to the same period. This gross profit level was almost insufficient to cover operating expenses.

However, a dramatic 72-fold increase in financial income, reaching VND 124.9 billion in Q2, helped TDC avoid losses in the second quarter. This surge was driven by profits from business cooperation contracts, amounting to VND 123.2 billion.

Financial expenses amounted to only VND 56.2 billion, entirely consisting of interest expenses. Selling expenses and administrative expenses accounted for VND 13.9 billion and VND 14 billion respectively. After deducting expenses and taxes, TDC reported a net profit of VND 74.2 billion, compared to a loss of VND 281.4 billion in the same period last year.

TDC's cumulative revenue for the first six months of the year reached VND 234.2 billion, with after-tax profit of VND 50.1 billion, mainly from financial profits recorded in Q2. Compared to the full-year business targets of VND 1,993 billion in revenue and VND 218 billion in after-tax profit, TDC has currently only achieved 11.8% of its revenue target and 22.9% of its profit target.

TDC has repeatedly been late in paying interest on bonds.

One of the reasons TDC had to raise funds from shareholders to repay bond debt was its business losses amounting to hundreds of billions of dong.

In 2023, the company only achieved revenue of 301 billion VND but incurred a loss of 403 billion VND. This was the first time TDC reported a loss and also a record loss, the highest in its 13 years since listing on the stock exchange. This loss dragged down the company's overall business results and affected its ability to repay debts.

Accordingly, TDC repeatedly delayed interest payments on the TDC.BOND.2020.700 bond issue three times. Specifically, the interest due on February 15, 2023, was VND 23.8 billion. TDC only paid VND 7 billion on time and then paid the remaining amount on February 23, 2023.

By May 15, 2023, the due interest amounted to VND 24.2 billion, but TDC only paid VND 10.2 billion. The remaining amount was paid in full on May 26, 2023. Similarly, by November 15, 2023, the company was due to pay VND 20.29 billion in bond interest but only paid VND 3 billion, completing the payment on November 17, 2023.

Although the payment delay wasn't significant, it still indicates that TDC is facing major cash flow problems.

Source: https://www.congluan.vn/kho-khan-ve-dong-tien-kinh-doanh-va-phat-trien-binh-duong-tdc-phat-hanh-35-trieu-co-phieu-lay-tien-tra-no-post315787.html