Prominent Vietnamese real estate player FLC faces a precarious situation due to its inability to liquidate assets for working capital. Former chairperson Trinh Van Quyet's arrest for inflating stock prices triggered investigations revealing stock value irregularities. Most FLC stocks have been removed or suspended, leading to financial losses and mounting debt. FLC's strategy to divest underperforming ventures, like aviation and mining, has yielded limited results. Debt has surged, totalling $1.2 billion, exceeding half of assets. Government supervision of 300 FLC projects follows Trinh's arrest, with some halted due to land clearance issues. Without swift change, FLC's plight may worsen.
FLC, a prominent player in the Vietnamese real estate sector, is teetering on the brink of a precarious situation. The company's struggle arises from its inability to liquidate sufficient assets to meet its working capital needs. The genesis of these challenges can be traced back to the actions of its former chairperson, Trinh Van Quyet, who was apprehended for artificially inflating FLC's stock prices in the previous year.
Investigations into the matter have uncovered glaring irregularities in FLC's stock values on the stock exchange. To date, six out of the seven FLC stocks listed on the market have been removed, and transactions involving the seventh have been suspended. Subsequent to these developments, FLC has grappled with substantial financial losses and a mounting burden of debt. Despite the management board's endeavours to have FLC stocks reinstated, their efforts have yielded no positive results thus far.
During a shareholder meeting in March, FLC's deputy general director, Tran Thi Huong, outlined the company's strategy to expedite the liquidation of assets as a means to secure the necessary capital for sustaining its operations. This plan entailed divesting from underperforming real estate projects and non-core ventures such as aviation, mining, and jewellery. However, except for the transfer of Bamboo Airways in May, FLC has been unable to finalize any significant deals.
The failure to liquidate these assets has led to a distressing escalation of FLC's debt. As of the quarter ending September 2022, the company's total debt amounted to 28.27 trillion dong (equivalent to US$1.2 billion), constituting more than half of its overall assets valued at 36.2 trillion dong (equivalent to US$1.5 billion). Notably, FLC has refrained from publishing comprehensive financial statements for 2021 and 2022, as a consensus with its accounting partner has yet to be reached.
Following Trinh's arrest, the government has taken on the role of supervising almost 300 FLC real estate projects spanning the nation. Several of these projects have been compelled to halt construction due to violations related to land clearance and compensation. In some instances, investment licenses have been revoked due to FLC's prolonged delays in project implementation. Without a rapid reversal of fortunes, the company's predicament seems poised to deteriorate further.
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