What does Novaland say about the massive debt owed by international bondholders?

Novaland Investment Group Joint Stock Company ( Novaland , ticker NVL) has just announced that it has held discussions with bondholders regarding the debt from its international convertible bond issue worth nearly US$300 million, currently listed in Singapore.

Due to liquidity difficulties, Novaland has been unable to meet its $7.8 million interest payment deadline. Company leaders stated they are negotiating with the Ad Hoc Group, the bondholders' group, on a restructuring plan that aligns with their current capabilities and business recovery roadmap. The negotiation process involves consultation with international and domestic consulting firms such as Deloitte, Sidley Austin LLP, and YKVN.

"Under conditions of limited resources, Novaland is committed to always striving to negotiate and resolve issues in a constructive spirit with the desire to find the optimal solution to ensure the rights of the bondholders," Novaland's statement read.

According to its financial report, Novaland is one of the entities that participated in raising a large amount of bonds. The total face value of short-term bonds, although reduced, still exceeded VND 14,132 billion at the end of the second quarter (all issued to domestic securities companies and banks).

Novaland is facing difficulties with several bond issues. (Photo: Duy Anh)

Meanwhile, the total face value of long-term bonds increased rapidly to nearly VND 28,993 billion. Notably, this includes an international bond issue (with a converted value of nearly VND 7,092 billion) issued to overseas partners, arranged and issued by Credit Suisse AG (Singapore branch).

This international bond issue is scheduled to mature on July 16, 2026. Novaland will pay bondholders an interest rate of 5.25% per annum, payable every six months. The bonds are unsecured but convertible into NVL shares at an initial conversion price of VND 135,700 per share (equivalent to approximately 33,916 shares per bond), subject to market adjustments.

Previously, according to Business Wire, Ad Hoc Group – representing the bondholders holding more than 75% of the $300 million bond issue – stated that further action would be taken if Novaland did not negotiate debt restructuring in good faith.

Bank of NY Mellon (USA) has also issued several notices regarding breaches of contract, most recently on July 17th, concerning a late payment of interest coupons due on July 16th, 2023. Although negotiations have reached an agreement on debt deferral, the corporation says it has not yet received good-faith cooperation.

A representative from Novaland stated that, given the challenging macroeconomic conditions, revenue and the ability to raise new capital have been significantly affected. Cash accounts at projects are always under close supervision by banks for project development purposes.

Therefore, Novaland is facing difficulties in making payments to domestic and foreign lenders as planned. The company is currently working to restructure its debt, negotiating suitable options to ensure a balance of interests with bondholders and lenders.

The leaders of this real estate company want more time for the business to recover; they also hope to receive the understanding of creditors and bondholders to quickly stabilize business operations and fulfill financial obligations to bondholders and related parties.

After a period of resolving difficulties in the real estate sector, Novaland is beginning to show signs of recovery. Many projects have had their legal and investment procedure obstacles removed, and projects such as NovaWorld Ho Tram, Aqua City, NovaWorld Phan Thiet, and The Grand Manhattan have been restarted with the support of financial partners such as TPBank, MBBank , VPBank, and contractors.

Novaland explains the decline in profit and raises doubts about its going concern ability . Novaland, chaired by Mr. Bui Thanh Nhon, has just provided an explanation regarding the discrepancy in after-tax profit in its consolidated semi-annual financial report and the doubts surrounding its going concern ability.

Source