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Deputy Transport Minister Nguyen Ngoc Dong recently signed Document 1142/BGTVT-QLDN, approving VNR’s selling of its holdings in those 15 companies.
The 15 companies have total charter capital of 680.5 billion VND, and VNR holds one-fifth of the figure, equal to 139.1 billion VND based on the face value of shares (10,000 VND per share).
Those firms are divided into three groups. Nine of them are those in which VNR had previously sold parts of its ownership, including Transport Investment and Construction Consultant JSC, Da Nang Construction JSC and Railway Urban and Infrastructure Development Investment JSC.
Four of the 15 companies are those in which VNR had previously put its shares up for sale, but failed to draw attention from investors. Those included Railway Construction Corporation and Project 3 Construction and Investment JSC, which are traded on the stock market.
The remaining companies are mining business Dong Mo Stone JSC and My Trang Stone JSC. VNR will make its first attempt to sell stakes in these two companies.
Though shares of these companies are apparently unattractive to investors, they are highly valued by securities firms. Shares of My Trang Stone JSC are valued at 11.2 times their face value, 4.2 times for Dong Mo Stone JSC and 2.3 times for Railway Construction Corporation.
If the sales are carried out successfully, VNR could raise more than 139 billion VND, to increase its spending on purchasing new rail cars and upgrade large railway stations this year.
“The management board of VNR should ask for opinions from the finance and planning and investment ministries so that it could develop the plan to sell its shares in those companies, while assuring the deals comply with existing regulations and provide high income to the State budget,” Deputy Minister Dong said in the document.
In order to make the sales more attractive to investors, in November 2017, VNR proposed its divestment plans to the Ministry of Transport, including starting prices and offering methods.
Under the plan, VNR will offer shares in packages for bidding on the Hanoi Stock Exchange and financial institutions, seeking to sell the remaining shares in the nine companies in which it had previously sold part of its ownership.
VNR will sell shares of the four firms that are traded on the stock market at market prices at the correct times. Also, the State-run railway corporation will offer shares of the two stone mining companies for sale on the Hanoi Stock Exchange.
To declare the starting prices of the sale, VNR proposed that the Ministry of Transport allow it to use the share price valuations conducted by financial institutions.
According to Dong, the divestment plans were also sent to the ministries of Finance and Planning and Investment to collect feedback.
In response, the Ministry of Planning and Investment said the plans may work well for the four companies trading on the stock market, and for Dong Mo and My Trang stone miners, as they comply with the Government’s Decree 91/2015/NĐ-CP dated October 13, 2015 on management of State capital in businesses.
However, the planning and investment ministry raised some concerns over the divestment plans for the four companies in which VNR planned to sell shares on the Unlisted Public Company Market (UPCoM), as the market prices of the shares were lower than the face values.
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