An anonymous Vietnamese bank has offered to buy Vinashin’s debts at a value of 35% of its USD600 million principle debt.

It may take 10 years for Vinashin to settle all its debts

Several credit organisations have expressed an interest in the debts. However, they have yet to reach a final decision on the price.

Over the past 13 months, Vinashin’s debts have regularly fluctuated.

In September 2010, Vinashin’s bonds were offered at around 60% of their face value. The rate increased to nearly 70% of its nominal value in October before tumbling to 50% when Vinashin and its creditors began negotiating over a more feasible solution.

In early November 2011, the Dutch Elliott Vin hedge fund lodged a petition with the London-based Appellate Court against Vinashin and its 21 subsidiaries to ask for their money to be repaid. At that point, Vinashin’s debts dropped to only 40% of its face value.

Discussions

In December 2010, Vinashin had to make an initial repayment of USD60 million of the USD600 million in owed debts to a group of US banks. Six months later, the group is scheduled to make another USD60 million repayment. Vinashin would be forced to make a combined USD180 million repayment by December 2011.

Creditors, however, started to show their impatience when they did not receive Vinashin’s initial promised repayment.

Credit Suisse of Singapore, Vinashin’s biggest creditor, continued to propose meetings to discuss the issue.

In April 2011, a committee including Credit Suisse, Depfa Bank, Maybank, and Elliott Advisors was established to discuss this issue. Initially, Standard Chartered Bank was a member but then withdrew.

After receiving support from some domestic banks, Vinashin proposed that the group could immediately pay 35% of its principle debts or that its old debt could replaced by new loans under new conditions.

Finally, creditors agreed to replace their old loans with a new 15-year term agreement together with London Interbank Offered Rate (LIBOR) plus 150 basis points per annum. The interest rate will increase by 50 basis points from the 11th to 15th years.

Is 35% of face value accurate?

The anonymous domestic bank that claims it is willing to buy Vinashin’s debts said that the price was equivalent to 35% of the company’s face value, as it could take 10 years for Vinashin to settle all its debts. The low price was expected to offset potential risks.

A foreign investment fund is willing to buy the group’s debts at a rate equivalent to 40% of its face value or lower.

An undisclosed source said that, over half of 13 Vinashin’s creditors had not wanted to join a lawsuit against Vinashin for fear that it would harm their business relations in Vietnam.