Hoang Anh Gia Lai (HAG) mortgaged shares and established a company in China.

Hoang Anh Gia Lai (HAG) invites shareholders to meet with leaders, plans to establish an affiliate company in China

Hoang Anh Gia Lai Joint Stock Company (HAG) has just sent an invitation to shareholders to attend a meeting taking place on August 20, 2023 to report on the business situation in the first 6 months of the year and share upcoming business orientation.

The company said that its business situation recorded 7,000 hectares of banana plantations and 1,200 hectares of durian plantations. In the pig farming sector, the company has built 10 pig farms with a capacity of 600,000 pigs per year.

More notably, in May, HAG established an affiliated company in China, in which HAG holds 50% of the charter capital, and the Chinese partner holds 50% of the capital. The establishment of the affiliated company is so that HAG can directly sell bananas to supermarkets instead of exporting bananas wholesale as it does now.

King Cam has shares of Hoang Anh Gia Lai, and has established a joint venture company in China. Image 1 — Hoang Anh Gia Lai (HAG) has just mortgaged its shares and now established an affiliated company in China (Photo TL)

According to the company, with this consumption channel, the Chinese partner will help HAG consume about 100 containers of bananas per month.

In addition, HAG is also planning to issue individual shares, but the details have not been disclosed. Previously, in April 2023, HAG unsuccessfully issued 161.9 million shares because the par value of the issue was much higher than the market price of HAG shares.

HAG must mortgage 30 million shares to secure a 500 billion loan for subsidiary Hung Thang Loi.

Recently, Hoang Anh Gia Lai Joint Stock Company also announced the Board of Directors' resolution on credit loan guarantee for Hung Thang Loi Gia Lai Company Limited.

This is a subsidiary of HAG, which manages many other subsidiaries including: Lo Pang Livestock JSC, Dai Thang Agricultural Development Company Limited, Khan Xay Agricultural Development Company Limited.

To secure a loan worth 500 billion VND for Hung Thang Loi Gia Lai at Saigon Thuong Tin Commercial Joint Stock Bank - Sacombank Gia Lai Branch, HAG plans to mortgage 30 million shares at Gia Lai Livestock Joint Stock Company.

In addition, HAG also committed to guarantee all debt repayment obligations for Hung Thang Loi Gia Lai at Sacombank Gia Lai branch arising from credit contracts for the above VND 500 billion loan.

HAG guarantees debt for its subsidiary while failing to issue shares to raise money to pay off debt.

The story of a parent company guaranteeing the debt of its subsidiaries is not something new. However, recently, Hoang Anh Gia Lai has failed in its plan to issue shares to raise money for its subsidiaries and pay off their debts. The fact that a unit that has to issue shares to raise money to pay off its debts is guaranteeing the debts of another unit really makes investors question.

Specifically, on January 17, 2023, Hoang Anh Gia Lai registered with the State Securities Commission a plan to issue 161.9 million individual shares. It is expected that this share issuance will be priced at VND 10,500/share. The total amount of money raised is about VND 1,700 billion.

With this amount, HAG plans to lend Hung Thang Loi Gia Lai 800 billion VND and its subsidiary, Lo Pang Cattle Company 400 billion VND. The remaining 500 billion VND will be used to pay off the principal of the bond lot coded HAGLBOND16.26.

Thus, the purpose of HAG's stock issuance is to raise money to lend to two subsidiaries as well as to pay off debts.

However, for many months, HAG's stock price still could not be pulled back to 10,000 VND/share, so it is completely understandable that HAG's plan to issue shares at 10,500 VND/share failed.

Regarding business performance, in the first quarter of 2023, HAG achieved revenue of VND 1,697 billion and profit after tax of VND 303.4 billion. In the second quarter, HAG's revenue grew negatively, to only VND 1,450 billion, and profit after tax was only VND 101.6 billion. At the trading session on August 16, 2023, HAG's stock price was only VND 9,190/share, still far from the par value of VND 10,000/share. The company is still suffering an accumulated loss of VND 2,946.8 billion.

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