Foreign investors divest floundering Tasco

09:46 | 06/06/2019
The performance of Tasco JSC has been plunging since the State Audit and Government inspectorate uncovered violations in its build-operate-transfer (BOT) and build-transfer (BT) projects and foreign investors like VinaCapital and Pyn Elite have announced selling off their Tasco shares.  
foreign investors divest floundering tasco
Foreign investors find the way to divest out of Tasco. Source: Tasco.com.vn

Pyn Elite Fund has announced selling one million shares of Tasco JSC (HUT) on May 23, thereby reducing its ownership to 26.5 million shares, equivalent to 9.88 per cent.

HUT closed the May 23 session at VND3,300 ($0.14) per share. Therefore, Pyn Elite Fund might collect about VND3.3 billion ($143,500). Also on May 23, HUT’s trading suddenly increased to nearly three million shares.

Pyn Elite has been actively divesting HUT since 2018. The fund has been selling down its interest in Tasco sold another two million shares in November 2018.

Another giant fund, VinaCapital, sold 950,000 HUT shares at the end of 2018. However, VinaCapital still holds 32.5 million HUT shares, equivalent to nearly 13 per cent, and remains a major shareholder.

HUT's market price has fallen to its lowest level since listing on the stock exchange. Only from the beginning of 2018, HUT's stock price has reduced by nearly 70 per cent from VND9,350 ($0.4) to VND2,900 ($0.13) per share. The capitalisation of Tasco is only VND779 billion ($33.87 million).

Pyn Elite started investing in HUT in 2015 and had been continuously buying shares until 2017 at the unit price of VND6,000-11,000 ($0.26-0.48). With the current market price of VND2,900 ($0.13), Pyn Elite, if all the investments are settled, will suffer a significant loss.

According to newswire DealStreetAsia, in August 2017, Ho Chi Minh City-headquartered VinaCapital, through its vehicle Vietnam Opportunity Fund (VOF), acquired almost half of the stakes put on private placement by Tasco JSC, becoming a major shareholder.

Earlier, Tasco had announced issuing 50 million new shares to investors. At the time, VinaCapital was to pick up 30 million of these shares, accounting for 12.5 per cent equity in the company. The offering price was VND10,500 ($0.46) per share, which VinaCapital called an “attractive price”, as reported by DealStreetAsia, especially in light of the VND11,700 ($0.51) the shares were traded at on August 7.

VinaCapital continues restructuring with $11 million Tasco private placement

Tasco’s business has not been very positive in recent years. In 2018, the company's revenue decreased by nearly half to VND1.147 trillion ($49.87 million), while profit was VND66 billion ($2.87 million), down 78 per cent from the previous year.

By the first quarter of 2019, Tasco had a revenue of VND319 billion ($13.87 million), but lost nearly VND14 billion ($600,000) due to financial expenses increasing sharply to about VND62 billion ($2.7 million).

Tasco’s total assets at the end of this March reached VND10.8 trillion ($469.57 million), of which liabilities exceeded VND7.6 trillion ($330.43 million), accounting for 70 per cent of Tasco’s total assets. Tasco’s short-term debts exceed VND1.6 trillion ($69.57 million) while long-term debts are over VND6 trillion ($260.87 million).

In addition, Tasco is entangled in scandals related to BOT and BT projects. Recently, the State Auditor pointed out a series of issues at the company's construction project of Le Duc Tho Road to Xuan Phuong new urban area.

Specifically, the State Auditor said that Tasco lacks the requisite financial capacity for the project. The project proposal has yet to be appraised and approved by a competent state agency, which causes big budgetary losses. Additionally, the company also violated regulations on negotiating and signing contracts for the project.

Also according to the State Audit, the allocation of land to investors was also contrary to the provisions of the Land Law. The failure to specify the time of land allocation resulted in a subproject receiving land before the BT project was begun and this subproject was also assigned reciprocal land when the BT project was not completed.

The calculation of land use fees to determine reciprocal value when allocating land to subprojects may easily have lead to state budget losses.

The project was started by Tasco on February 15, 2009, however, it has only been completed in April 2017, after long years of delays. The total length of the road is 3.51 kilometres, with a cross-section of 50 metres housing eight lanes. The investment capital for the project was VND1.543 trillion ($67.1 million).

At the same time, in the report on the above audit, the agency proposed a fine of VND391.6 billion ($17.03 million).

Tasco is an enterprise specialising in investment, transport infrastructure exploitation, and real estate investment. Currently, Tasco is managing and collecting fees at My Loc BOT (Nam Dinh) and Tan De BOT (Thai Binh), National Highway 10 BOT (Hai Phong), and National Highway 1 BOT. Besides, VETC, a Tasco subsidiary, is also the operator of the electronic toll collection system (ETC) at several projects. Besides doing BOT projects, Tasco also participates in many BT projects to increase its land fund for its real estate activities. For example, Tasco built the 3.5-kilometre Le Duc Tho Road to receive 70ha of land in exchange, approved by the Hanoi People's Committee, including 68ha in Xuan Phuong and 3,000sq.m at 48 Tran Duy Hung Street (Cau Giay district).

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