Local auto giant buys entire bond issue of agricultural company

By Minh Huong    August 5, 2018 | 08:57 pm PT
Local auto giant buys entire bond issue of agricultural company
Agrico expects gross profits of over $74 million this year
Truong Hai Auto Corporation has bought almost the entire convertible bonds issue of Agrico, Hoang Anh Gia Lai’s farming subsidiary.

The purchase happened on August 3 after existing shareholders voted with their feet.

In June, HAGL had offered 221,710 bonds to shareholders, each convertible into 1,000 shares, but a mere 22 was bought.

Thaco picked up the remaining 221,688 bonds for VND2.2 trillion ($97.7 million), which carry a coupon rate of 0 percent and are convertible in June 2019.

Agrico, listed on the Ho Chi Minh Stock Exchange, closed at VND16,950 ($0.75) per share last Friday.

Following the conversion, Thaco will hold more than 221 million shares, or about 25 percent of Agrico.

The money raised from the bond issue will be used to develop orchards and restructure Agrico’s finances.

Agrico has been growing fruits since 2016, and last year its passion fruit, banana, chili, and dragon fruit crops fetched revenues of VND1.6 trillion ($71 million), accounting for around 49 per cent of HAGL’s total revenues.

With 100,000 hectares of land, cheap labor and 83 cold storage facilities in Laos, Cambodia, Myanmar, and Vietnam, as well as 25 major distribution partners, HAGL said its fruits are sold to a market of three billion people in China, India, Japan, South Korea, and other ASEAN countries like Thailand.

In 2018, Agrico expects sales of VND3.7 trillion ($164.4 million) and gross profits of VND1.67 trillion ($74.2 million).

In the last three months, with its share prices rising 2.5-fold, the company is worth VND15 trillion ($666.6 million).

Dong Nai-based Thaco was established in 1997 by Tran Ba Duong as an auto and commercial vehicle maker.

It has a plant in Quang Nam and 89 showrooms and 53 dealerships.

It manufactures commercial vehicles like trucks and buses and assembles cars for brands like Kia (South Korea), Mazda (Japan), and Peugeot (France). 

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