Hoang Anh Gia Lai (HAG) converts subsidiary debt into shares

Hoang Anh Gia Lai Joint Stock Company - HAGL (Code HAG) has just announced the Board of Directors' resolution approving the registration to buy shares offered to existing shareholders. With this resolution, HAGL will register to buy 77.72 million shares of Gia Lai Livestock Joint Stock Company.

In addition to the resolution to purchase shares of Gia Lai Livestock JSC, HAG also approved the review of HAG's outstanding loans. From there, the outstanding loans, interest receivables and receivables of Gia Lai Livestock will be converted into equity capital. The amount of converted shares is expected to be about 77.72 million.

Thus, after these two resolutions, HAGL will own 165.75 million shares in Gia Lai Livestock, corresponding to 85% of charter capital. Also related to Gia Lai Livestock Joint Stock Company, at the General Meeting of Shareholders, this unit approved the policy of separating the enterprise according to the plan of converting part of the assets, rights and obligations of existing shareholders to establish a new joint stock company without terminating the existence of the old company.

The newly separated company is Kon Thup Agriculture JSC located at 859 Truong Chinh, Chi Lang Ward, Pleiku City, Gia Lai Province. This is also a subsidiary of HAGL with an ownership ratio of up to 88.03%.

Continuous divestment and asset sales to pay off debt

In recent times, HAGL’s debt repayment story has been a hot topic among investors. Because this unit has continuously made moves to sell assets and divest capital to get money to pay off debt.

Typically, Hoang Anh Gia Lai has just had to transfer all shares of the Bapi pork chain. Specifically, HAGL will sell all 2.75 million BAPIHAGL shares, with a par value of VND10,000/share. If the transaction is successful, BAPI Hoang Anh Gia Lai will no longer be an affiliated company of HAGL.

BAPI Hoang Anh Gia Lai was established in May 2022 with a charter capital of 50 billion VND and is currently a distribution chain of Bapi banana-fed pork products. The company's headquarters is located in Pleiku City, Gia Lai Province.

Also related to the debt repayment issue of Hoang Anh Gia Lai, the company has just had to sell both the hospital and the hotel to get money to pay the debt. In particular, HAGL has transferred 9.9 million shares that the unit owns at the University of Medicine and Pharmacy Hospital - Hoang Anh Gia Lai. This amount of shares corresponds to the ownership ratio of 99% of the charter capital. According to the previous announcement, this amount will be used by the company to pay the principal and interest of the maturing bonds that were issued since 2016.

Previously, Hoang Anh Gia Lai sold Hoang Anh Gia Lai Hotel located at No. 1 Phu Dong, Phu Dong Ward, Pleiku City, Gia Lai Province and earned about 180 billion VND. This amount was also used to pay off debt.

Profit of hundreds of billions each quarter, HAG still has to sell assets to pay debt

Regarding business performance, HAGL's Q3/2023 financial report recorded revenue of VND 1,889.4 billion, up 31.1% over the same period. Profit after tax reached VND 324.6 billion, up 12.2%. Part of the sudden increase in profit was recorded from the liquidation of fixed assets, contributing VND 144.1 billion to the company's Q3 business results.

Entering October 2023, Hoang Anh Gia Lai's revenue also recorded 711 billion VND, an increase of 52.3% over the same period. Of which, the fruit tree segment contributed 57.7%, equivalent to 410 billion VND. The livestock segment contributed 27.8%, equivalent to 198 billion VND. The supporting industry was 103 billion VND. In October, the company continued not to announce profits as it did in previous monthly reports.

As of the end of September 2023, HAGL is borrowing a total of more than VND 7,778.8 billion. This includes VND 3,930 billion in short-term loans and VND 3,848 billion in long-term loans. The amount of domestic regular bond loans is up to more than VND 5,166 billion.