Novaland, one of Vietnam's leading property firms, has put forth a proposal to employ assets from its luxury development, The Grand Manhattan, to pay off outstanding debt on three bond lots. In a letter sent to bondholders, Novaland expressed its commitment to settling the principal and interest on the NVLH2123009, NVLH2123014, and NVLH2224006 bond lots using properties from the project.
Overcoming Financial Challenges
The company currently faces overdue payments for the NVLH2123009 and NVLH2123014 bond lots, with a combined value of over VNĐ1.58 trillion. Additionally, the NVLH2224006 lot, valued at VNĐ1.5 trillion, has been extended for two more years until March 2026. To overcome financial challenges, Novaland has made several repayments to creditors using real estate assets.
Fulfilling Obligations and Commitments
Novaland assures bondholders that it is dedicated to honoring its obligations and commitments. Furthermore, the company has proposed a plan that allows bondholders to choose units and locations within the remaining inventory of projects such as Novaworld Phan Thiết and The Grand Manhattan. Not only will bondholders enjoy preferential selling prices, but they will also have access to applicable services at different times.
A Resumed Luxury Project
The Grand Manhattan, situated in District 1 on a 14,000-square-meter plot of land, features three 38-story blocks with apartments that are sold for over VNĐ100 million per square meter. Novaland has recently resumed work on this luxurious project after a temporary halt at the end of 2022. Despite prior losses, the company's third-quarter after-tax profit reached over VNĐ136 billion, signifying a return to profitability.
Navigating Challenging Times
Although Novaland's total consolidated revenue exceeded VNĐ2.73 trillion in the first nine months of the year, it still faced a loss of over VNĐ950 billion. Moreover, the company's total debt to be repaid stands at over VNĐ205.46 trillion, reflecting a 3.5 percent decrease from the previous quarter. Against the backdrop of a sluggish property market and reduced cash flows, many companies, including Novaland, are seeking to negotiate with bondholders to extend bond redemption dates.
Risks and Challenges
Experts caution that extending maturity dates comes with risks and challenges. Negotiations can be complex and time-consuming, requiring a thorough assessment of the company's financial health and future debt repayment capabilities. Bondholders have expressed reservations about accepting real estate assets as bond repayments, citing concerns regarding overpricing and potential legal issues.
Reviving the Bond Market
The corporate bond market in Vietnam experienced a boom in recent years, driven by increased capital demand from property developers and banks. However, the market took a hit following the arrest of the chairwoman of Vạn Thịnh Phát Group on bond market fraud charges. The real estate sector currently holds the largest outstanding bond value, accounting for 33.8 percent of total outstanding bonds. The Prime Minister has instructed the central bank and the finance ministry to enhance their management of the bond market to revive it.
In conclusion, Novaland's proposal to utilize assets from The Grand Manhattan to settle bond debt demonstrates its commitment to fulfilling its obligations. While navigating financial challenges, the company remains dedicated to finding solutions and providing benefits to its bondholders.
