Dungquat Shipbuilding Industry Company Ltd (Vietnam)

The subject (DQS) is a shipbuilding company that was established in Feb 2006 as a former subsidiary of Vietnam Shipbuilding Industry Group (VINASHIN). In its development strategy, Vinashin determined that the subject would be the largest and most modern shipyard in Vietnam, one of the largest shipyards in Southeast Asia, able to build ships of up to 400,000 tons. However, because of asynchronous and ineffective investment along with the depression of the Shipbuilding industry, its shipyard facilities have been used with just little capacity. After the crisis of VINASHIN, it was transferred to VIETNAM OIL AND GAS GROUP (PVN) in 2010. PVN had "injected" 1,915 billion VND in charter capital into DQS, supporting nearly 3,500 billion VND to repay bank debt. At the same time, the subject was comprehensively restructured, cutting from 2,000 employees to 700 employees. Since 2010 to now, DQS gradually prospered with large-scale repair and maintenance contracts, it has had 182 projects, including 68 projects in the industry and 30 foreign projects. Namely, in 2020, DQS received the supertanker Galilean 7 for repair and conversion into a floating oil storage facility (FSO). It also signed contracts with ship firms such as Stelios, Semen Dezhney, Elefsis, Golden Phoenix...and implemented a Construction package at Hoa Phat Dung Quat Iron and Steel Complex. Despite that, the subject still suffered a large loss of VND 2,600 billion, as reported by PVN, which did not come from poor production and business, but from debts and losses from operations before 2010. Its financial structure was risky when owner equity was in deficit for many years.In May 2023, during the working session on resolving difficulties for the subject. PVN has calculated the following options: Converting DQS valuation to auction assets; DQS bankruptcy plan according to the provisions of law; Continue to restructure DQS or establish a new unit on the basis of transferring DQS's assets and human resources and liquidating existing assets. As a link in the value chain of the oil and gas industry, PVN wishes to continue to maintain and improve the efficiency of DQS's operations. PVN requests the competent authorities to continue restructuring DQS, proposing a number of investment and financial solutions to effectively restructure DQS in the coming time.In general, strict monitoring of transactions with the subject is necessary.