Fat Race Group struggles to pay off bonds

Two lots of unpaid bonds

On May 9, 2025, the State Securities Commission issued a Decision on administrative sanctions in the field of securities and securities market against Dua Fat Group Joint Stock Company (code DFF).

Among a series of violations named, this enterprise was punished for publishing false information related to bonds.

Accordingly, the Company has added 720,000 DFF shares as collateral as committed in the Bondholders' Resolution dated June 13, 2022. However, in the Report on the implementation of commitments to bondholders for the 2024 semi-annual period (No. 230829.04/CV-DF dated August 29, 2024), 2023 (No. 240330.04/CV-DF dated March 30, 2024), 2023 semi-annual period (No. 230829.04/CV-DF dated August 29, 2023) and 2022 (No. 230330.04/CV-DF dated March 31, 2023) sent to HNX, the Company announced that it had properly implemented its commitments on collateral for bonds coded DFFH2123001.

The HNX system recorded that Dua Fat issued 2 bond lots in 2021. Bond lot DFFH2123001 worth 150 billion VND was issued in September 2021 with a term of 18 months, maturing in March 2023. Bond lot DFFH2124002 worth 300 billion VND was issued in December 2021, with a term of 36 months and maturing in December 2024.

Dua Fat has encountered many problems related to these two bonds and could not pay the principal and interest on time. In early 2024, the Group announced that the owner of DFFH2123001 bond had allowed Dua Fat to make the remaining overdue principal and interest payments of this bond without going through a payment agent.

The announcement of the company's bond principal and interest payment situation said that by the planned payment date of December 31, 2024, the company has not yet paid the remaining principal of more than VND 51 billion of lot DFFH2123001 and VND 300 billion in principal and more than VND 51.2 billion in interest of bond lot DFFH2124002.

The reason for the delay in payment, according to Dua Fat, is that the economy in general and the construction industry in particular are facing many difficulties and disadvantages. The company has a small number of projects and the investor does not pay on time, leading to financial difficulties in arranging to pay due debts. The company is still negotiating with bondholders to request an extension of the bond principal and interest payment.

Based on the latest financial report of Dua Fat, the first quarter financial report of 2025, it shows that these two bond loans are still being recorded, showing that even though the initial maturity period has expired, Dua Fat has not yet paid the bond debt.

Accordingly, the Company still has outstanding short-term bonds of VND 341 billion, including VND 41 billion with Bao Viet Securities Corporation and VND 300 billion with Bao Viet Bank.

The DFFH2124002 bond lot of 150 billion VND currently has 41 billion VND remaining, Dua Fat has mortgaged 15 million shares as collateral. The remaining bond lot of 300 billion VND was issued to Bao Viet Bank to invest in the construction of Ninh Binh Port, purchase machinery and equipment for the company's production and business activities. Dua Fat used the asset mortgage contract, the barge construction contract between DFF and 189 LLC; the sales contract between Dua Fat and TCE Equipment and Services JSC; the construction Ponton sales contract between Dua Fat and Vietnam Construction Investment and Project Management JSC; the economic contract between Dua Fat and TMD Import-Export LLC as collateral for this bond lot.

In the first quarter of 2025, Dua Fat continued to suffer losses. Net revenue in the first quarter of this year reached 74.4 billion VND, up 55% over the same period last year. However, this revenue was much lower than the cost of goods sold (135 billion VND), causing the company to fall into a gross loss. Profit after tax was recorded at -116.9 billion VND, a heavier loss than the same period in 2024 (the first quarter of 2024 lost 21.2 billion VND). This is the 7th consecutive quarter of loss for Dua Fat.

Previously, in 2024, Dua Fat lost up to 462.5 billion VND, this is a record loss ever. As of the end of the first quarter, the Company had an accumulated loss of 680 billion VND.

Involved in a series of violations in the securities sector

The recent penalty decision of the State Securities Commission pointed out a series of violations by Dua Fat in the securities field.

Accordingly, this company was fined VND 92.5 million for not disclosing information that must be disclosed according to legal regulations as prescribed in Point a, Clause 4, Article 42 of Decree No. 156/2020/ND-CP.

The Company does not disclose information on the State Securities Commission's information disclosure system, the Hanoi Stock Exchange (HNX) website and the Company's documents. Including: Resolution of the Board of Directors approving the 2022-2023 business plan and Agribank loan plan; Resolution of the Board of Directors approving the content of lending money to Vinh Hoa Company Limited - a subsidiary; Resolutions of the Board of Directors approving the content of transactions with related parties; Information disclosure before the early bond buyback with code DFFH2123001 on November 25, 2022.

The Company disclosed information late on a series of documents: Explanation related to the Financial Report for the first quarter of 2024 (Business results of loss), audited financial statements for 2022 and consolidated financial statements for 2022; Annual Report for 2022; Audited separate and consolidated financial statements for 2022; Certificate of change in business registration content dated July 11, 2024; Company Charter approved by the Annual General Meeting of Shareholders on June 9, 2023 and approved on June 25, 2024; Report on the implementation of commitments for the first half of 2024: The use of proceeds from bond issuance audited for the first half of 2024; The payment of principal and interest for the first half of 2024, etc.

In addition, the company was also fined VND 65 million for disclosing information with incomplete content as prescribed by law as prescribed in Point b, Clause 3, Article 42 of Decree No. 156/2020/ND-CP.

Accordingly, Dua Fat did not fully present the content according to the form prescribed in Appendix V on the form of Corporate Governance Report issued with Circular No. 96/2020/TT-BTC dated November 16, 2020 of the Minister of Finance guiding information disclosure on the stock market.

Specifically: Not fully presenting the summary content of each Resolution of the Board of Directors in Section 5, Part II of the Report on the corporate governance situation in 2022, the first 6 months of 2023, 2023 and the first 6 months of 2024; The Report on the corporate governance situation in 2022 does not state the Board of Directors' Decision No. 21.3/2022/QD-HDQT/DFF dated March 21, 2022 on the approval of the Company's Charter and the Board of Directors' Resolution No. 220830/2022/NQ-HDQT dated August 30, 2022 on the transfer of land use rights, house ownership and other assets attached to land; has not presented the advance and refund transactions with insiders (Ms. Nguyen Thi Thuy Linh - Member of the Board of Directors) in Section 2, Part VII, Report on corporate governance in the first 6 months of 2023, and the transaction with Ms. Tran Thi Hong Nhung - a related person of Mr. Le Duy Hung (Chairman of the Board of Directors) in Section 2, Part VII, Report on corporate governance in the first 6 months of 2024.

At the same time, due to the act of disclosing false information, Dua Fat was fined 175 million VND. In addition to the act of supplementing insufficient bond collateral as mentioned above, the company also disclosed incorrect indicators of Profit after corporate income tax in 2021, 2022, 2023 and the first 6 months of 2024 in the separate and consolidated financial statements of the fourth quarter of 2021, the fourth quarter of 2022, the fourth quarter of 2023 and the semi-annual financial statements of 2024 compared to the audited financial statements of 2021, 2022, 2023 and the reviewed financial statements of the first 6 months of 2024.

In Section 2, Part II of the Corporate Governance Report for 2022 and 2023, the Company stated that the number of Board of Directors meetings during the year was 25 meetings and 11 meetings, respectively. However, according to the documents provided by the Company, the total number of Board of Directors meetings in 2022 was 26 meetings and in 2023 was 12 meetings.

With the false information published, Dua Fat is forced to cancel the information or correct the information for the act of publishing false information, according to the provisions of Clause 6, Article 42 of Decree No. 156/2020/ND-CP amended and supplemented according to the provisions of Point d, Clause 33, Article 1 of Decree No. 128/2021/ND-CP.

In addition, the company was fined an additional VND 137.5 million for violating regulations on transactions with shareholders, business managers and related persons of these subjects as prescribed in Point c, Clause 6, Article 15 of Decree No. 156/2020/ND-CP, amended and supplemented as prescribed in Clause 13, Article 1 of Decree No. 128/2021/ND-CP.

Specifically, the company provided loans to Vinh Hoa Company Limited (an organization related to Mr. Le Van Thinh - a shareholder of the Company) and Le Gia Logistics Joint Stock Company (an organization related to Mr. Hoang Hiep - a shareholder of the Company).

The total amount that DFF was fined for the above series of violations is 470 million VND.

Source: https://baodautu.vn/tap-doan-dua-fat-chat-vat-tra-no-trai-phieu-d283697.html