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Truong Thanh Furniture faces delisting for heavy losses

Released at: 09:09, 04/02/2017

Truong Thanh Furniture faces delisting for heavy losses

Photo: Duc Anh

The final decision now lies in its audited financial statement for 2016's fourth quarter.

by Duy Anh

After a dismal business performance in 2016’s fourth quarter, the final decision to delist Truong Thanh Furniture’s (TTF) shares now lies in its audited financial statement.

The company’s consolidated financial statement for 2016’s fourth quarter showed a total loss of VND145 billion ($6.4 million) bringing its full year’s loss to VND1.63 trillion ($72 million) of which its cumulative losses amounted to VND1.768 trillion ($7.8 million). Moreover, the wood company has had a negative owner’s equity of more than VND195 billion ($8.6 million) as of December 31, 2016.

From September-December gross loss stood at nearly VND27 billion ($1.2 million), financial costs surged as high as VND65 billion ($2.9 million), and administrative costs were VND34 billion ($1.5 million). TTF’s shares are currently being put under a special control list by the Ho Chi Minh Stock Exchange (HoSE) and its shares are fluctuating around the VND5,000 ($0.22) price range. In just four months TTF’s shares fell dramatically from VND43,700 ($1.92) on July 19 to VND4,000 ($0.18) on November 18.

As VET had earlier reported, there are only two options for TTF to avoid delisting - have a profit of VND160 billion ($7 million) in the fourth quarter last year to balance cumulative losses vs. charter capital, or request that Tan Lien Phat go ahead with its loan.

Tan Lien Phat became a major TTF shareholder in May last year after acquiring 72 million shares for VND25,000 ($1.1) per share TTF then saw some instability in its senior personnel. On August 12, founder Mr. Vo Truong Thanh was dismissed from his duties as Chairman of the Board of Management after not taking sufficient responsibility as Chairman during TTF’s tough times. He was replaced by Vingroup’s Deputy Managing Director Ms. Vu Tuyet Hang.

TTF’s shares fell dramatically after the Tan Lien Phat Company, a subsidiary of Vingroup, suddenly announced in mid-July the suspension of its loan of VND1.2 trillion ($53.8 million) to TTF in exchange for 69 million of TTF’s shares after finding serious discrepancies in data relating to inventories as well as questionable debts.

Since Tan Lien Phat has announced plans to offload its holdings in TTF from 49.9 per cent to 29.9 per cent, the second option is off the table. Current policy regulates that an enterprise will be delisted if its cumulative losses surpass its charter capital based on audited financial statements. With the recent announcement of its business performance in the fourth quarter, the final decision for its delisting will lie in its audited financial statement.

But despite its difficulties, the company continued to increase its borrowing last year. Liabilities increased by another VND568 billion ($25.1 million) during the year of which short-term loans accounted for VND2.6 trillion ($115 million) and long-term loans VND30 billion ($1.3 million). For short-term loans, Viet A Bank has the largest outstanding loan of VND653 billion ($29 million), Dong A Bank with VND124 billion ($5.5 million), SHB with VND56.5 billion ($2.5 million) ,and Kien Long Bank with nearly VND60 billion ($2.65 million).

According to TTF, all those loans were taken to increase the mobilizing capital to meet the business needs, including payment for wood materials and other costs. As of December 31, 2016, interest rates of those loans varied from 10.25 per cent to 11 per cent for VND loans and 5 per cent to 6.9 per cent for foreign currency loans. For long-term loans, TTF owes VND36 billion ($1.6 million) to Kien Long Bank and VND3 million ($132,600) to Agribank.

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