Vietnam Airlines plans to issue 8 trillion dinars ($ 350 million) of common stock for sale to existing shareholders to supplement working capital and repay debt.
It plans to complete the issue in the first six months of 2021, after obtaining regulatory approval, according to a December 30 filing on the Ho Chi Minh City Stock Exchange which details a meeting of shareholders on December 29. .
The airline said the show would increase its charter capital. In a Vietnamese company, share capital is the amount that shareholders contribute within a prescribed period and can be used as working capital, according to management consulting firm Dezan Shira & Associates.
Vietnam Airlines declared a charter capital of 14,200 billion dinars in its 2019 annual report.
The funds raised through the sale of the new shares will be used for working capital requirements, as well as for the payment of principal and interest on the debt.
The airline will coordinate with State Capital Investment Corporation (SCIC), a state-owned investment fund, to finalize the issue.
In November, the Vietnamese government approved a plan to buy new shares of Vietnam Airlines through SCIC, according to a Reuters report on December 29. Then, SCIC said it could invest up to 6,800 billion dinars to buy new shares of the airline as part of the support plan.
Vietnam Airlines is 86.2% owned by the Vietnamese government, 8.77% by ANA Holdings and 5.04% by other shareholders, according to its 2019 annual report.
At the same shareholders’ meeting, the chairman of the airline’s board of directors, Dang Ngoc Hoa, presented a report calling on shareholders to submit loan proposals to Vietnam Airlines at preferential interest rates. The loans are expected to have a three-year term and be available in 2021 and 2022, depending on the airline’s capital needs.
Vietnam’s central bank, State Bank of Vietnam, cut key interest rates to help businesses amid the Covid-19 pandemic, after cutting interest rates three times in 2020 , according to a December 24 press release posted on its website.
Vietnam Airlines has suffered since Vietnam suspended international commercial flights in March 2020 in response to the Covid-19 pandemic.
Deputy Planning and Investment Minister Tran Quoc Phuong told local media on January 4 that Vietnam has no plans to resume international commercial flights as the Covid-19 situation remains dire, according to a same-day report published by local English-language media. VNExpress International.
The country has also banned flights from countries like the UK and South Africa that have recorded mutations in the virus, the same publication reported on January 5.
Vietnam has reported 1,497 confirmed cases of Covid-19 and 35 deaths, according to World Health Organization data extracted on January 6. The country’s Department of Health said on January 2 that it had found Vietnam’s first case of the ‘VOC 202012/01’ variant which was first detected in the UK in October.