According to a proposal from Novaland Group (NVL)'s Board of Directors, the company will issue private shares to restructure debts exceeding 2,645 billion VND and improve its financial standing. Over 168 million shares will be issued if approved by shareholders at an extraordinary meeting on 7/8 and by the relevant authorities.

Each share will be issued at nearly 15,747 VND. The corresponding debt value will be exchanged for newly issued common shares. The exchange price is based on the average closing price of NVL shares over 30 trading days, from 19/6 to 30/7. This price is approximately 12.5% lower than the closing price on 5/8.

If approved, NVL will submit the proposal to the State Securities Commission (SSC) for review and approval. The issuance is expected to occur between the last quarter of this year and Quarter I/2026. The issuance represents 8.616% of outstanding shares. Upon completion, Novaland's charter capital could reach over 21,181 billion VND.

The three creditors eligible for the exchange are NovaGroup, Diamond Properties, and Hoang Thu Chau. These shareholders pledged their shares for Novaland's loans. During the company's difficulties, these shareholders had to sell their pledged shares to repay the debts. They have now reached an agreement in principle for a debt-for-equity swap with NVL.

NovaGroup, where Bui Thanh Nhon, Chairman of Novaland's Board of Directors, is the largest shareholder with a 70% stake, and Diamond Properties, chaired by Cao Thi Ngoc Suong, Nhon's wife, are two of the creditors.

Bui Thanh Nhon, Chairman of Novaland's Board of Directors, at an event in 10/2022. Photo: Quynh Tran

As of the end of 2024, NovaGroup's outstanding debt was approximately 2,527 billion VND, Diamond Properties' was 111.7 billion VND, and Hoang Thu Chau's was nearly 6.7 billion VND. NovaGroup is expected to receive nearly 160.5 million shares, Diamond Properties nearly 7.1 million shares, and Chau 424,000 shares.

After the issuance, the total ownership of the major shareholder group related to Bui Thanh Nhon will reach 42.428%. Currently, it stands at approximately 37.48%, nearing the threshold for losing veto power at Novaland.

The newly issued shares will be restricted from transfer for one year after the issuance's completion. Novaland's management affirms its commitment to transparency and fairness for all investors.

"The additional share issuance will temporarily dilute existing shareholders' holdings, but Novaland and its major shareholders are working to achieve the business plan and recovery targets. This aims to protect the interests of shareholders and stakeholders," a company representative said.

In the upcoming extraordinary meeting, Novaland will also propose a convertible loan with a maximum limit of 5,000 billion VND, a 5-year term from the disbursement date, and payment upon maturity.

The lender can request to convert part or all of the principal outstanding into the company's common shares. The conversion period is from 12 months after the final disbursement date to one month before the loan's maturity or early repayment. The conversion price is determined by market reference but not lower than 115% multiplied by the closing price of NVL shares 5 days before the final disbursement.

Novaland's revenue has improved, but costs remain high, and cash flow was 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, with approximately 32,300 billion VND due within the next 12 months.

Therefore, the company states it cannot fully repay the outstanding debts from 2022 to the present. It continues to explore debt restructuring options for these debts, aiming for a resolution between late 2026 and early 2027.

Tat Dat