Tan Hoang Minh issued bonds to mobilize nearly 10,000 billion: Debt spiral

Alarm on relying on loans and bonds

Not only has raised nearly 10,000 billion VND of capital from bonds, Tan Hoang Minh Group also owes the bank with approximately more than 17,000 billion VND mobilized for real estate. Of course, in the operation of businesses, borrowing is normal. However, if debt reversal is like a pinwheel in the middle of a spiral, it is a different story.

According to information on the official website of Tan Hoang Minh Group, this group has 7 member units (Soleil Hotel Services & Investment JSC; Winter Palace Joint Stock Company; Real Estate Investment Co., Ltd.) Viet Star; ALG Real Estate Management Joint Stock Company; THM Green Joint Stock Company; THM – Concrete Trading and Production Joint Stock Company; D’ Land House Joint Stock Company).

In which, 5/7 subsidiaries of the group have borrowed trillions of dong through the use of collateral. In which, in 2013, Soleil Company borrowed up to 1,250 billion VND to do business.

Winter Palace Joint Stock Company was also granted a credit worth nearly VND 650 billion on December 17, 2020. The collateral for this large loan is the property right to the entire commercial area of ​​the mixed-use public service, commercial, kindergarten and apartment project at 2 Dang Thai Mai. (Tay Ho district, Hanoi city).

Recently, on November 22, 2021, Electricity Joint Stock Finance Company also lent a loan of VND 254 billion to the Winter Palace Joint Stock Company. Collateral is the entire property rights formed from the contract of Tan Hoang Minh’s subsidiary company to the hotel and resort apartment project at the Hoang Hai complex tourist area project (Phu Quoc district, Kien Giang province). ).

Not stopping there, the famous enterprise in the case of “screaming billions of dollars and then putting down the deposit” in Thu Thiem is Viet Star Company, which also borrows a large amount of money from a bank by the end of 2021. The collateral is estimated at 600 billion. copper. Specifically, assets are more than 3 million shares of Viet Tien Trading and Development Investment Joint Stock Company, which is held by Viet Star Company. In addition, Tan Hoang Minh also mortgaged a number of shares worth nearly 300 billion VND.

Previously, another member of Tan Hoang Minh (THM Green Joint Stock Company) borrowed hundreds of billions of dollars by mortgaging the bank with all property rights and interests related to the purchase and sale of 45 apartments. Apartments under the D’Palais De Louis project (Cau Giay district, Hanoi). This is considered as the gathering place of “emperial apartments” of Tan Hoang Minh. However, most recently, Saigon-Hanoi Commercial Joint Stock Bank (SHB) offered to sell the debt of Green – Art Landscape Infrastructure Joint Stock Company at Vinh Phuc branch. However, the bank did not disclose the amount of the debt. (The collateral for the debt is 45 apartments at the D’Palais De Louis project (Cau Giay district, Hanoi) signed between Tan Hoang Minh Hotel Trading Service Co., Ltd and Infrastructure Joint Stock Company. Green – Art landscape).

Pushing risks for investors

Looking back at the bond investment contract of Tan Hoang Minh, this company in the role of the issuer signs with its customers. Bonds are issued with a par value of Vietnam dong, non-convertible, without warrants or collateral.

The face value written on the bond is 100,000 VND, but the amount to be paid by the customer will be larger. Specifically, to “invest” a bond worth 100,000 VND, customers will have to spend an amount equivalent to 109,195 VND. The average 1-year rate of return for each bond will be around 12%.

After the owner Tan Hoang Minh was arrested and the Securities Commission canceled 9 lots of this company’s bonds, investors nationwide were confused because they did not know if they could get their money back. Minh Hung (Dong Da, Hanoi) invested VND 200 million from November 1, 2021 to buy Tan Hoang Minh bonds with an interest rate of 11.2%. “I contacted the company and received a promise that in 5 days (from April 8), the business has a plan to refund investors. However, many investors are confused because they do not know where businesses can get money to return the cash that has been mobilized more than 10,000 billion VND at this time when the business is being investigated by the police,” Hung said.

Recently, Vietcombank Securities (VCBS) has just reported on the impact assessment of the State Securities Commission’s cancellation of 9 bond offerings of Tan Hoang Minh Company.

The analysis team assessed that, in case the management agencies can coordinate with Tan Hoang Minh to properly settle the interests of bondholders (organizations and individuals), the extent of damage will be limited to the extent of the damage. narrow micro; conversely, if Tan Hoang Minh faces great risks, then the financial market as well as banks (related to the granting of credit to Tan Hoang Minh) will suffer stronger spillover effects.

For real estate businesses, VCBS believes that the cancellation of Tan Hoang Minh bond issuance results in the short term will significantly negatively affect the ability to raise capital of the group of businesses in the same industry. Accordingly, investors will be much more cautious about the safety of real estate corporate bond products.

According to this assessment, in the current context, corporate bonds have become an important capital mobilization channel for real estate businesses since 2018 when credit sources for real estate began to be tightened.

Many economic experts also warned that the use of financial leverage from loans and bonds will create virtual real estate fevers, easily leading to market collapse when the bond and loan bubble is “pumped” “stretch.

Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association, said that the mobilization of capital by real estate enterprises from banks and bonds is regulated in the Housing Law. However, capital mobilization must be considered whether it is used for the original purpose of real estate development or used for other purposes.

According to Mr. Le Hoang Chau, the biggest shortcoming at present is that there are no reputable consulting organizations (similar to Fitch Ratings) to evaluate and rate businesses, including bond issuers, to ensure information transparency and contribute to the protection of bond investors.

According to Viet Linh