Need mechanism for SCIC to "sell debt" to DATC

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For businesses falling into the state of dissolution, bankruptcy, the participation of DATC in the process of buying SCIC debt and restructuring enterprises is essential. Photo: ST.

Sanctions are not strong enough

Promoting divestment in state-owned enterprises without holding capital to accumulate investment capital in the industry, key areas is one of SCIC's tasks. After nearly 12 years of operation, SCIC has sold capital in more than 990 enterprises with a cost of VND 8,544 billion and a return value of over VND 39 trillion, more than 4.6 times the cost of capital. However, during the divestment process, SCIC also encountered many difficulties affecting the results and progress of selling capital from the impacts of the market to internal enterprises. One of them is the difficulty of dealing with debts in capital-selling enterprises.

According to current regulations, before divesting, SCIC will have to recover all outstanding debts of enterprises. However, in the process of implementation, the debt recovery of SCIC is facing problems of overdue or difficult to pay dividends in unlisted enterprises. In fact, some unlisted enterprises, though announcing dividend payment, but the time of closing the list of shareholders as well as the time to pay dividends is not clear. Some enterprises deliberately misappropriated shareholders' capital. In addition, there are also some enterprises having difficulties in arranging cash flow to pay dividends or some enterprises actually have difficult financial situation, dividends for many years...

In recent years, SCIC has implemented many measures to promote debt handling as a basis for divestment such as reviewing and comparing debts with businesses, regularly urging debt recovery ... However The main obstacle to debt collection before selling capital is still a lack of specific regulations and sanctions which are not strong enough for enterprises as debtors. Over time, this situation will become more and more disadvantageous due to changes in personnel leadership, changes in shareholder structure or loss of production and business operations, even dissolution and bankruptcy.

To solve this problem, SCIC has recently proposed a proposal to consider setting up a debt trading cooperation mechanism between SCIC and DATC. This proposal combines both "legality" and "sentiment" in the current context.

In terms of “sentiment ", as the main pillar in charge of debt handling associated with SOE restructuring, DATC has achieved remarkable results. In addition to those businesses that DATC has handled successful restructuring debts such as Sadico Can Tho, Lam Son Sugar, etc., the company also supports debt settlement and restructuring SOEs as in the case of Northern Food Company. Vietnam Tobacco Corporation, Vietnam Maritime Corporation (Vinalines), Haprosimex Company; approach to propose solutions for Song Hau Farm and many other businesses. Thereby, it has contributed to improving the financial capacity to accelerate the equitization process according to the project approved by the Government in association with the recovery of debts.

In debt trading activities, DATC has bought and processed nearly 7,000 billion Dong of bad debts of domestic credit institutions; including contracts with large transaction value of thousands of billion VND in large-scale enterprises. Thereby, DATC has dealt with debt, financial restructuring in 25 businesses that suffered losses, implemented debt transfer into investment capital in 6 enterprises with a value of nearly VND 300 billion. In addition, DATC has successfully divested from 7 enterprises to collect about VND 100 billion.

These figures illustrate the debt handling capacity of DATC.

Both sides benefit

In terms of “legality ", DATC has its own advantages compared to Asset Management Company of other credit institutions (AMC) in debt handling. Specifically, Decree No. 126/2017 / ND-CP replacing Decree No. 59/2011 / ND-CP on equitization of SOEs affirmed DATC's role and duties in dealing with debts to support restructuring. SOEs carry out equitization. For example, the regulation of the representative agency directs enterprises to coordinate with DATC and creditors of enterprises to develop a debt trading plan to restructure enterprises, or to preserve and hand over debts and asset types, excepting DATC within 15 working days since the decision to announce the value of the enterprise. This Decree also stipulates that the agency representative is responsible for approving a plan to buy and sell restructured debt within a period of no more than 3 months after obtaining a written agreement of DATC.

Thus, Decree 126 and guiding documents have created a favorable legal framework for DATC to participate in the debt settlement process of SOEs during the restructuring process.

According to SCIC's representative, if the coordination mechanism between these two enterprises is built and enforced, bad debts in enterprises under SCIC's divestment schedule will be considered, negotiated for resale for DATC. This brings significant benefits to both parties. On the one hand, SCIC helps accelerate the process of selling capital, promptly recovering capital for the State, completing the equitization process of all state capital in enterprises. On the other hand, with the restructuring, debt transfer to capital contribution, DATC in the role of shareholder will support the Board of Directors (BOD) and the Board of Management of enterprises to improve the management and financial situation, raise High production and business efficiency.

In particular, for businesses falling into the state of dissolution, bankruptcy, the participation of DATC in the process of purchasing debts from SCIC and restructuring enterprises is very necessary, to help enterprises overcome the crisis, stabilizing production and business step by step

In order to create and implement a cooperation mechanism between SCIC and DATC in particular and debt trading organizations in general, SCIC believes that it is necessary to have an appropriate legal framework. Accordingly, this content must be institutionalized in the Decree on SCIC's functions and tasks, allowing SCIC to actively sell debts at enterprises to promote the divestment process; at the same time, specify the circumstances in which debt can be sold as well as the principles and methods of determining the selling price of debts ...

SCIC manages State capital of nearly VND20 trillion at 141 firms

Besides, because most of the debts to be dealt with are dividends, the value is not large, if there is a conversion into ordinary shares, it is not enough to account for a significant proportion in the ownership structure of enterprises. Therefore, attractiveness is not high. Therefore, SCIC proposed to diversify debt trading methods. For example, instead of selling each single debt, SCIC is sold in packages for debts in some companies in the same industry or with the same value chain, sold in enclosing packages between enterprises with good potential and lost businesses.