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BASIS POINT-MOF finally steps in for Vinashin restructuring
HONG KONG, Feb 5 (BASIS POINT) - More than two years after Vietnam's state-owned shipbuilder Vinashin defaulted on a US$600 million loan, the Ministry of Finance has finally decided to step in by offering to guarantee a bond issue under a restructuring plan, a source familiar with the matter said.
Vinashin has sent out the restructuring proposal to creditors that could put an end to the saga started in 2010.
Loan bankers had provided the loan to the state-owned enterprise on the basis of implied government support, but were disappointed when the government left the company in the lurch -- bankrupt with about US$4 billion of debt.
Since then, Vinashin, or Vietnam Shipbuilding Industry Group, has had no success on restructuring proposals.
The new restructuring package is in the process of being sent out to the 20-odd existing creditors, with a response deadline of February 15, the source said.
The latest proposal involves swapping the US$600 million loan plus accrued and unpaid interest of US$20 million with US$620 million zero-coupon bonds. The MOF-guaranteed bonds will have a 12-year tenor.
Interest on the bonds will accrete at 1 percent per annum and will be paid on maturity, along with the principal.
The proposal requires consent from two-thirds of the creditors by number as well as amount they hold.
The US$600 million eight-year loan was signed in June 2007 following participation from more than 20 banks, most of them said to be commercial banks. It was increased from an original size of US$200m and was the largest syndicated loan from Vietnam. Credit Suisse was the mandated lead arranger and bookrunner.
Vinashin sent out the latest restructuring proposal via the agent Credit Suisse, which is the only remaining member of the steering committee and also has one of the largest holds on the deal.
The existing creditor group comprises some of the original lenders and institutional investors such as hedge and vulture funds which bought the paper from banks that sold out their exposure following the default.
The facility, with an average life of 5.75 years, paid a margin of 150bp over Libor and upfront fees ranging from 5bp to 25bp in 2007. (Reporting By Prakash Chakravarti)
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