Ahead of an extraordinary general meeting, Novaland Group (NVL) announced a supplementary proposal seeking shareholder approval for a share issuance plan to swap outstanding bond principal. The debt comprises 13 bond codes issued between 2021 and 2023, primarily maturing between 2023 and 2025, with a total outstanding principal of 6,074 billion VND.
Novaland plans to issue over 151.85 million shares at 40,000 VND per share. This means every 40,000 VND of outstanding bond principal can be exchanged for one new share. This price is more than double NVL's closing price on August 6th.
A company representative explained that this outstanding individual bond principal has largely remained since 2023. Due to challenging business conditions and pressures over the past few years, the company has been unable to repay the debt as committed.
According to the management board, the valuation method and exchange ratio are based on NVL's book value at the end of 2024, the support of bondholders, and the current market situation. Novaland also considered the expected market price of the stock at the time of issuance.
"The management board believes in the potential for recovery after a series of legal obstacles at key projects were resolved in Quarter II, along with continued support from partners and credit institutions in a generally more positive economic environment," the representative added.
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Novaland's logo at the entrance of a real estate project. Photo: NVL |
Novaland's logo at the entrance of a real estate project. Photo: NVL
After obtaining shareholder approval, the company will submit the plan to the State Securities Commission (SSC) for review and approval, with implementation expected in 2026. Shares issued for bond debt swaps will be restricted from transfer for one year.
If successful, Novaland's charter capital will increase to over 21,019 billion VND. The issuance ratio to the total number of outstanding shares is 7.786%. Management acknowledged that in the short term, issuing more shares will cause dilution for existing shareholders, but described it as a "necessary step" to help Novaland restructure, reduce cash flow pressure, and improve financial safety ratios, while demonstrating goodwill and ongoing efforts to protect the interests of all parties.
Previously, NVL proposed issuing over 168 million shares to restructure debts exceeding 2,645 billion VND at a price of nearly 15,747 VND per share. This was 13.5% lower than NVL's closing price on August 6th.
The primary buyers were two companies related to Chairman Bui Thanh Nhon, NovaGroup and Diamond Properties. These shareholders pledged their shares for Novaland's loans. During the company's difficulties, these shareholders had to sell their pledged shares to repay debts on Novaland's behalf.
If this issuance was successful, the total ownership of the major shareholder group related to Mr. Bui Thanh Nhon would have reached 42.428%. Currently, the figure is around 37.48%, nearing the threshold for losing veto power at Novaland.
In total, NVL is proposing to issue nearly 320 million additional shares to repay major shareholders and bondholders. This represents over 16.4% of the total outstanding shares.
Novaland's revenue has improved, but costs remain high, and cash flow remains challenging in the first half of the year. The company reported a loss of approximately 666 billion VND by the end of Quarter II. Novaland's total outstanding debt is over 61,800 billion VND, of which approximately 32,300 billion VND is due within the next 12 months.
Therefore, they state they are not yet able to fully repay the debts outstanding since 2022. They are continuing to explore new restructuring options for these debts to find solutions by the end of 2026 to early 2027.
Tat Dat
