Vietnam minister says Vinashin should make its own debt payment 

Last updated: 12/8/2010 20:05 

A Vietnamese minister said state-owned Vietnam Shipbuilding Industry Group, known as Vinashin, should make a US$60 million debt payment on its own as the government offers to help the company become profitable.

“They will have to pay on their own,” Planning and Investment Minister Vo Hong Phuc told journalists in Hanoi Wednesday. “We will restructure Vinashin’s projects and we will help Vinashin operate profitably so it can pay debts by itself.”

Vinashin may default on foreign-currency liabilities within the next 30 days, Standard & Poor’s said Dec. 6. Moody’s Investors Service last month cited the company as saying on Nov. 19 that it may delay the $60 million principal payment on a $600 million loan. The company invested in non-core activities, falsified financial reports and is on the verge of default, the World Bank said in October.

“I think the government will find a way to help them,” Ayumi Konishi, the Hanoi-based country director for the Asian Development Bank, said in response to Phuc’s comments. “At the same time, they want to make it clear that debts are the responsibility of Vinashin as a corporate entity.”

Standard & Poor’s suspended its confidential solicited rating on Vinashin on Oct. 18 because of a “lack of information regarding the company’s liquidity position and restructuring plans, and due to our concerns on the accuracy, timeliness and completeness of Vinashin’s financial statements.”

The shipbuilder last month won government approval for a turnaround that includes paring debt 38 percent and transferring units to other state-owned companies. The company had accumulated debt of about US86 trillion ($4.41 billion) as of June, the government said in August.

Vinashin’s debts will fall to VND53 trillion under the plan, which ministries will work on through 2013, the government said in a Nov. 19 statement on its website.

Source: Bloomberg

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