The Debt and Asset Trading Corporation (DATC), under the Ministry of Finance, has considered providing a maximum sum of VND250 billion ($12 million) to handle the debt of beleaguered seafood company Bianfishco, its CEO Pham Quang Thanh told Tuoi Tre.
Thanh said the debt-ridden company is expected to return to operations next month, functioning as an outsource manufacturer for other seafood exporters to maintain work and income for its 3,000 workforce.
There are two solutions for Bianfishco to restart, added Thanh.
The first option is to sell Bianfishco, he said, adding that many investors from Japan and the US are showing interest in the company for its modern technology and high economic potential.
“DATC will act as an intermediary if there is any deal,” he said.
In the second plan, DATC will consult, intermediate, and propose solutions for Bianfishco and its creditors, most of which are the credit institutions, to negotiate for the debtor to restart operation.
If any creditor wants to sell the debt Bianfishco owes them, DATC will buy it, he said.
“[Bianfishco’s] total debt is around VND1.5 trillion ($72 million), with VND1 trillion indebted to the banks, while the company’s total assets are VND2 trillion.”
It’s the banks that count
However, Thanh cautioned that the second solution may be hindered if the creditors are not willing to cooperate.
Banks hold the key decision on whether or not Bianfishco can restructure its debts, he explained.
From the case of Bianfishco, Thanh also complained that most banks have only focused on evaluating their borrowers’ collateral assets, rather than the effectiveness of the projects subject to the loan application.
In the case of Bianfishco, the banks offered loans without an adequate inspection into what the company would do with the money, as it later turned out that the seafood company had managed to borrow VND20 billion ($960,000) only to buy a luxury car.
“Worse, when the borrowers face troubles, banks only focus on collecting debts, rather than sharing the difficulties with them,” he added.
As for the plan to restructure Bianfishco, Thanh said its shareholders should be restructured first.
Bianfishco should invite shareholders that are experienced in the seafood sector and have true management ability to take its helm.
“Some local seafood businesses have also planned to join Bianfishco via the investment funds,” he said.
“An international investor has also bid $120 million to buy the whole company.”