Credit Suisse to accept Vinashin's plan to restructure its debt

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Workers build a ship for delivery later this year at a Vinashin shipyard in the central province of Quang Ngai. The government has decided to restructure the state-owned shipbuilder, whose debts totaled more than US$4 billion.

Credit Suisse Group AG will accept a debt restructuring plan that Vietnam Shipbuilding Industry Group put to its creditors, helping to resolve negotiations surrounding a default that occurred more than two years ago, according to a person familiar with the matter.

The Swiss lender sent a letter to about 20 other creditors of the Hanoi-based company, telling them it plans to accept the proposal and outlining the rationale for them to do the same, said the person, who asked not to be identified because the matter is private.

Vietnam Shipbuilding Industry Group proposed swapping a $600 million loan, plus accrued and unpaid interest, with bonds guaranteed by Vietnam's finance ministry, the person said. State-owned Vinashin, as the company is known, received the $600 million financing in 2007 from a group of institutions led by Credit Suisse, according to data compiled by Bloomberg.

Vinashin missed the first $60 million payment on the principal in December 2010, putting the loan into default, Moody's Investors Service said.

Hanoi-based Chief Executive Officer Truong Van Tuyen wasn't immediately available to comment on the debt restructuring plans when called by Bloomberg News on his mobile phone. Josephine Lee, a Hong Kong-based spokeswoman for Credit Suisse, declined to comment.

Changed hands

Since the loan was first made, much of the debt has changed hands in the secondary market, the person familiar with the matter said. About half is held by a range of small regional lenders in Asia and the remainder by institutional investors and hedge funds, the person said.

Under the debt restructuring plan, Vinashin has proposed swapping the loan with zero-coupon bonds which will have a tenor of 12 years, the person said. Interest on the bonds will accrete at 1 percent per annum and be paid upon maturity, along with the principal and some $22 million of accrued interest.


Creditors' legal fees of as much as $2.5 million would be paid at the effective date of the restructuring, and the loan is to be novated in the form of Euroclearable notes, the person said. The total amount of the notes at the issue date will be $622 million, representing the principal outstanding and the $22 million in accrued interest, the person said.

An entity of Vietnam's finance ministry will issue the securities, and the government department will fully guarantee the debt, the person said.

Vinashin needs creditors holding at least 75 percent of the $600 million loan by value and 51 percent by number to consent to its proposal to be able to file a scheme of arrangement with a U.K. court, the person said.

Reuters reported details of the debt restructuring yesterday, citing an unidentified person familiar with the matter

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