Novaland cannot pay debt despite having $1.35B in cash

By Duc Minh, Vu Le   December 29, 2022 | 12:27 am PT
Novaland cannot pay debt despite having $1.35B in cash
An artist's impression of houses at Novaworld Phan Thiet in Binh Thuan Province. Photo courtesy of Novaland
Property developer Novaland cannot use its VND32 trillion ($1.35 billion) in cash at banks to pay debts as most lenders have earmarked it as additional collateral asset.

However, the company had said this issue and several others require the government’s intervention in a letter to the Prime Minister’s Office last month.

The letter was recently seen by VnExpress.

The HCMC-based company, which is going through a restructuring process after facing difficulties due to geopolitical issues, inflation and tightened credit, also sought resolution of a number of other problems it is facing at several localities.

It has called on the Ministry of Finance to dispatch an asset valuation company to assess the land value of its Novaworld Phan Thiet urban residential project in Binh Thuan Province.

It has not been able to find a valuation company, and without third-party determination of the value, it could not pay the land use fees to obtain land use rights for buyers of the land lots, it said.

It also sought redressal of administrative issues it faces in Ba Ria – Vung Tau Province and Ho Chi Minh City.

In HCMC, it has 23 projects facing various legal blocks.

Ho Chi Minh City Real Estate Association chairman Le Hoang Chau said the city has over 100 projects that have legal issues needing to be resolved, and Novaland tops the list in terms of number of projects.

They have a variety of issues ranging from land use fees to investment procedures and obtaining land use rights, he told VnExpress, adding that no solution has been found for them.

Novaland, a major developer of housing projects and resorts in the south, said it has been facing unprecedented challenges this year and that some banks have stopped disbursing loans they had agreed to provide while some buyers cannot pay the money they owe.

The company has cut its payroll by half, sold some assets at low prices and has had to stop work on some major projects.

It is now in the process of restructuring and seeks to have its debts rolled over for another two or three years.

It wants the government to instruct a state-owned bank to provide it with credit to complete its unfinished projects.

Novaland, one of eight subsidiaries of NovaGroup, reported revenues of over VND7.9 trillion and post-tax profit of VND2.05 trillion in the first nine months.

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