Following the easing of foreign investments in Vietnam and the slashing of foreign ownership limit, Infrastructure Investment Corp is planning to dilute the stake of US based Goldman Sachs by buying 50 million shares. The company is planning to sell the shares to current investors at 130% of the purchase price or rewarding its current shareholders. The company has quoted that it will open the room for 100% foreign investment thus making it more attractive.
The Ho Chi Minh City Infrastructure Investment Corp (CII) is looking at the possibility of purchasing up to 50 million units of its own shares from Goldman Sachs, when the US investment banking firm converts the bonds (into shares) for sale in the market. That means CII will have to spend some VND1 trillion for the plan. The company has given several options for the use of the treasury stocks, including using it as reward shares for shareholders, selling to investors at 130 per cent of the purchase price, or selling the shares directly into the stock market. Investment funds managed by Goldman Sachs bought CII bonds worth $40 million in 2011.
A tranche of $15 million bonds was later converted into CII shares, and the Ho Chi Minh City-based company had spent almost VND200 billion to buy part of those shares.
The US firm still holds $25 million convertible bonds of CII, which will mature on January 27 next year. CII is also looking at the possibility to extend the maturing date of the bonds by one more year.
While CII stock price is traded at around 24,000, the converting prices for Goldman Sachs are only VND10,000 for the $15 million batch and VND18,800 for the $25 million batch, meaning the US firm will profit tens of million dollars. The bonds have an annual coupon of four per cent. Initially, Goldman Sachs would be able to convert the bonds into CII shares from the second year at the price of VND43,500, but in 2013 CII reduced the converting prices. Meanwhile, the Vietnamese company said it will open the room for foreign investment to 100 per cent, following the local government’s ease to slash the foreign ownership limit. The current overseas holding in CII is nearly 46 per cent.
Source: DealStreet Asia