A notable decision among these is the directive from HBC Chairman Le Viet Hai to purchase 75% of the capital contribution of Thanh Ngan Real Estate Company Limited, thereby achieving 100% ownership of the 127 An Duong Vuong project (District 6, Ho Chi Minh City). Simultaneously, HBC will issue 47 million HBC shares at a price of VND 12,000 per share (1.5 times higher than the stock exchange price on the date the resolution was issued). Thus, the total amount spent on this project is VND 564 billion, equivalent to the amount raised from the issuance of 47 million HBC shares.
The project has a total area of 15,394.7 m² , and has been granted a land use right certificate. This includes 6,279.6 m² for high-rise commercial housing and services and 6,567.5 m² for education . A total of 218 billion VND has been paid into the state budget. According to market surveys, land prices in prime locations around An Duong Vuong Street are currently trading above 100 million VND/ m² .
A project in Thu Thiem where Hoa Binh Construction Group is the contractor.
According to Mr. Le Viet Hai, the project is very promising and will bring significant revenue and profits to HBC. The two new strategic shareholders investing in HBC will hold a total number of shares exactly equal to the number of shares Mr. Le Viet Hai currently holds in HBC. The two shareholders, Pham Quang Hang and Mai Huu Thung, have also agreed to purchase 47 million shares at a price 50% higher after thoroughly researching HBC's difficult financial situation and understanding the company's promising strategy for developing overseas markets. With their strong financial capabilities and strategic vision, these two new shareholders will be two highly potential strategic partners for HBC.
In addition, HBC also approved the application and transaction for credit granting with Vietnam Maritime Commercial Joint Stock Bank. The maximum short-term credit limit is 2,000 billion VND. This includes a maximum loan limit of 1,000 billion VND and a maximum guarantee limit of 1,000 billion VND. The purpose is to supplement working capital and provide guarantees for business operations, with a maximum term of 12 months. This was also approved through the acquisition of all shares of Mr. Le Viet Hai in Pax International Company at the actual contributed capital (138 billion VND). Furthermore, it was approved through the sale of all contributed capital of Hoa Binh Innovation Center Co., Ltd. for 167 billion VND. Of this amount, 127 billion VND was spent on the project, leaving a profit of 40 billion VND. Through an agreement to transfer land use rights between Mr. Le Viet Hai and Ms. Bui Ngoc Mai for 3 plots of land with a total area of 7,218.6 m2 on Phan Van Hon Street (District 12, Ho Chi Minh City), for the price of 120 billion VND.
All transactions at Hoa Binh will be conducted without cash, involving only the issuance of shares and the recovery of advances previously made for the group's business purposes. Recovering these advances will provide the group with additional assets to enhance its financial capacity.
According to Chairman of the Board of Directors Le Viet Hai, with these strategic decisions, Hoa Binh will soon stabilize its business situation, overcome difficulties and challenges, and will certainly regain its former position in the not too distant future.
Furthermore, according to Mr. Le Viet Hai, out of a total of 21 lawsuits regarding delayed payments, 10 have received court rulings. Hoa Binh won all of these cases. The principal debt recorded in the accounting books was 829 billion VND, while the total amount the defendants must pay to Hoa Binh, according to the rulings, reached 1,223 billion VND, including late payment interest and other incurred costs – a 47.5% increase. Currently, 593 billion VND has been recovered, leaving 630 billion VND to be collected from the 10 won cases. Mr. Hai also added that the real estate market will recover in the near future, so the outstanding debts will gradually be processed, and he is confident that the recovery rate will not be less than 100%, ultimately increasing the amount recovered by at least 15% of the overdue principal debt. In HBC's business history, there has never been a debt item in the financial statements that needed to be written off by the Board of Directors due to uncollectibility.
On the other hand, applying international accounting standards, Hoa Binh will re-evaluate its assets in the near future because the figures recorded in its accounting books are outdated. For example, the house at 235 Vo Thi Sau Street - Hoa Binh's former headquarters - recorded in the books at only 5.6 billion VND in 2000, is now worth no less than 100 billion VND. Similarly, the house at 233 Vo Thi Sau Street and the land plot at 1C Ton That Thuyet Street (District 4, Ho Chi Minh City) are also worth significantly more. Regarding the remaining value of machinery and equipment, it can be confirmed that it is much higher than the value recorded in the accounting books.
According to the financial report as of December 31, 2022, Hoa Binh's total investment in machinery and equipment to date is VND 2,208 billion, with VND 1,305 billion already depreciated, leaving a remaining value of only VND 903 billion. Thus, the remaining value is only equivalent to 40% of the original cost. In reality, the entire scaffolding system is made of galvanized steel, so it is not subject to significant rust or damage. Cranes, hoists, concrete pumps, etc., are all in good working condition. Due to inflation, the current purchase price of new equipment is always higher than the original purchase price of these assets.
Therefore, in the coming period, HBC will adjust its equity capital after issuing additional shares and revaluation of assets. This increase in equity capital will help Hoa Binh secure its credit limit, significantly improve its financial capacity to overcome immediate cash flow difficulties, and help settle all outstanding debts to suppliers and subcontractors.
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