State-owned mining group Vinacomin has raised VND500 billion (US$24.1 million) through a local currency bond issuance after Standard & Poor's issued a warning about its liquidity last month.
According to news website VnExpress, the five-year bonds were issued as part of a larger plan to sell 3,000 bonds with a value of VND1 billion each this year. "The group will decide on the next issues based on market conditions," an unidentified executive was cited as saying.
The proceeds will help Vinacomin increase its operating capital and finance its mining projects.
The bond sale came after Standard & Poor's revised the credit rating outlook for the group to negative on June 27, citing weak cash flows and high capital expenditure as the main reasons.
According to the rating agency, Vinacomin's liquidity was "less than adequate." As of December 31 last year, the company had VND7.4 trillion in cash, compared with short-term debts of VND8.17 trillion.
Tran Xuan Hoa, chairman of Vincomin's member board, said in an interview published on the government's website Sunday that the group plans to divest from non-core business lines including insurance and real estate from now to 2015. Its investments outside the mining sector are estimated at more than VND6 trillion.
Hoa said Vinacomin needs VND36-39 trillion each year to invest in its projects but it is still making losses of VND8.5 trillion a year on selling coal at low prices to the electricity sector.
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