The well known Vietnamese Hoang Anh Gia Lai Group said it hopes legal procedures will be completed within August 2010 which allows it to sell $60 million worth of convertible bonds to Temasek Holdings, an investment corporation belonging to the Singaporean government.
Chairman of Hoang Anh Gia Lai Group Doan Nguyen Duc revealed the information about the bond issue to Thoi bao Kinh te Saigon on the sideline of the meeting, where Hoang Anh Gia Lai introduced the plan on restructuring the group to shareholders and potential investors in HCM City on the afternoon of July 30.
Duc said last week, Hoang Anh Gia Lai and Temasek signed a memorandum of understanding (MOU) on the bond issue, while the investment affair has been approved by the investment council of Temasek.
Currently, Hoang Anh Gia Lai is following formalities in Vietnam to implement the deal. It has to consult with the group’s shareholders and seek to get the approval from the State Securities Commission (SSC), before a contract is compiled and signed by the two involved parties.
Duc told Thoi bao Kinh te Saigon that all procedures may be completed by Aug. 20. The convertible bonds, which will become stakes after a certain time, will have the term of one year.
Hoang Anh Gia Lai will try to wrap up the affair with Temasek soon, and Duc said it still does not have any further plan to issue bonds to foreign investors, even though some German and Swiss investors have expressed their willingness to purchase Hoang Anh Gia Lai’s bonds.
When asked why Hoang Anh Gia Lai chooses Temasek to sell bonds, Duc said Temasek is a big corporation belonging to the Singaporean government, which is willing to make long-term investments (always 10 years or more).
Regarding the sum of money Hoang Anh Gia Lai gets from issuing bonds, Duc said the money will be used for projects on rubber, minerals and hydropower plants.
Hoang Anh Gia Lai has basically wrapped up the procedures to restructure the holding companies and five subsidiaries. Hoang Anh Gia Lai now operates in many fields, from rubber plantation, minerals, real estate, hydropower plants and wooden furniture production.
Rubber plantations will be the top priority of the group with the establishment of the Hoang Anh Gia Lai Rubber Corporation. The corporation now owns 51,000 hectares of land for growing rubber in Vietnam, Laos and Cambodia. It is managing the business through six subsidiaries which have operations in the three countries.
According to Duc, the group has 24,000 hectares of rubber being grown in the Central Highlands of Vietnam and in Laos and Cambodia. The group plan to expand the area for rubber growing to 64,000 hectares.
Meanwhile, the Hoang Anh Gia Lai Mineral Joint Stock Company will become the Hoang Anh Gia Lai Mineral General Corporation. The corporation has six subsidiaries in Vietnam, Laos and Cambodia, and it owns iron mines in the three countries, which have total reserves of 60 million tons.
Hoang Anh Gia Lai Real Estate General Corporation has been set up based on the Hoang Anh Construction and Housing Development Company. The corporation now owns 20 real estate projects, six of which have been completed.
Hoang Anh Gia Lai Group will also have a hydropower development company that will make investments in 17 projects with the total capacity of 420 MW.
The main goal of Hoang Anh Gia Lai when it tries to restructure the group is to improve corporate governance and make the group more flexible in mobilizing capital. Duc said the convertible bond issuance to Temasek and other earnings from real estate will bring some 5 trillion dong to Hoang Anh Gia Lai which will be poured on its five main business fields.
After rubber, Hoang Anh Gia Lai prioritizes the development of mineral exploitation, real estate development, construction and hydropower.
As planned, Hoang Anh Gia Lai will sell 10 percent of stakes in every business field to strategic investors and then sell another 20 percent of stakes to the public before it lists its shares on the stock exchange, slated for the second quarter of 2011 to 2014.