The Board of Directors of Quoc Cuong Gia Lai Joint Stock Company (stock code: QCG) recently presented a financial restructuring plan to shareholders. This plan aims to settle a debt arising from a "promise to buy, promise to sell" contract for the Bac Phuoc Kien residential project with Sunny Island Investment Joint Stock Company, an entity associated with Truong My Lan. This was a mega-project, which former QCG General Director Nguyen Thi Nhu Loan once anticipated would generate over 12,000 billion VND in revenue and 7,000 billion VND in profit.

According to QCG management, the "promise to buy, promise to sell" contract for the Bac Phuoc Kien residential project was "fully compliant with legal regulations," and the company received 2,882.8 billion VND from Sunny Island.

However, due to the partner's breach of agreement, the company initiated a lawsuit at the Vietnam International Arbitration Center (VIAC). VIAC ruled that QCG could terminate the contract and required the partner to return all project site clearance documents. Subsequently, the Ho Chi Minh City People's Court annulled the arbitration award, citing that these documents served as evidence in a criminal case. Late last year, the Ho Chi Minh City High People's Court issued an appellate ruling, compelling QCG to refund 2,882.8 billion VND to retrieve these documents.

To date, the company has paid 1,100 billion VND to enforcement agencies. This payment primarily came from advance revenue generated by the transfer of hydropower plants and personal loans. QCG's financial situation faces challenges due to the general real estate market downturn, unresolved legal issues for its projects, and lower-than-expected inventory sales.

To secure funds for the remaining payment, management proposes transferring capital contributions in subsidiaries and associated companies this year. A condition for these transfers is that the value must not be less than the original investment cost. Additionally, the company seeks to collaborate with capable investors on real estate products and projects.

Management views the repayment of the remaining debt as crucial for maintaining normal operations. This action will prevent enforcement agencies from implementing coercive measures, which could result in asset losses.

As of the end of QIII, QCG's financial report shows total assets exceeding 8,760 billion VND and liabilities totaling 4,150 billion VND. Of this, the outstanding payable related to the Bac Phuoc Kien project is 1,982 billion VND. The fact that short-term liabilities exceeded short-term assets led the auditing unit to express doubts about the company's ability to continue as a going concern in its half-year financial report.

This year, QCG aims for a net revenue of 2,000 billion VND and a pre-tax profit of 300 billion VND, representing increases of 274% and 306% respectively compared to its previous performance. After the first nine months, the company recorded revenue of 354 billion VND and an after-tax profit of 34 billion VND.

Phuong Dong