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Furniture maker to issue cheap shares

Update: June, 21/2012 - 10:11

HA NOI — Truong Thanh Furniture (TTF) has a plan to issue additional shares at a substantially discounted price in a bid to raise capital while avoiding high borrowing costs. The price for the issue would be set at just VND5,000 per share, half of the par value of the company's outstanding shares.

"This is quite an attractive price under current market conditions," TFF chairman Vo Truong Thanh told the publication Thoi bao Kinh te Sai Gon (Sai Gon Economic Times). If the price were higher, the shares would be unlikely to attract buyers, he said, noting that the low offer price would not harm existing shareholders.

"We have treasury shares valued at VND200 billion ($9.5 million) to cover the shortfall in par value," Thanh said.

Last year, the company's borrowing costs soared to VND234 billion ($11 million) in interest payments to banks.

"We really need a measure to increase cash flow and eliminate the great pressure of paying interest," he said.

Thanh also revealed that the share issue was the fallback plan if a deal with a Korean partner failed. TTF had been working with this foreign investor to acquire shares and bonds worth a combined VND150 billion ($7 million).

The current plan, if approved next month in a scheduled vote of company shareholders, was likely to net about VND90 billion ($4.2 million) in new capital, Thanh said.

TTF shares closed yesterday on the HCM City Stock Exchange at their ceiling price of VND7,900. — VNS

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