In addition to owners' equity, Hoa Phat has mobilized tens of trillion dongs from Vietinbank and Vietcombank to invest in Dung Quat steel complex.
The recent report published by Hoa Phat Group shows that the total value invested in Dung Quat iron and steel production complex reached $900 million by the end of last September.
Half of the investment was disbursed in the third quarter of this year when the first phase of the project was in the final stage. The first line is expected to be put into operation early next year.
The Dung Quat project, which has an investment scale of $2.3 billion, is expected to run by the end of 2019.
To make investment in the project, Hoa Phat Group issued more shares to its shareholders to mobilize $213 million at the end of last year of which $151 million was disbursed according to its report in last June.
A half of the fixed investment capital of the project, $853 million, is planned to be borrowed from banks and credit institutions. In the first nine months of this year, corporate borrowings increased by $381 million, most are long-term loans.
Vietinbank and Vietcombank are said to be financial providers for this project of Hoa Phat, according to an unidentified source. In the latest report, the company does not update its debt situation at two banks. After the first six months of this year, Hoa Phat's loan in Vietinbank increased by $119 million and in Vietcombank by $13 million.
The current assets of Dung Quat project's phase 1 including machinery and equipment, rights arising from insurance contracts and other property rights are mortgaged at Vietinbank Hanoi.
Machinery and equipment, many assets, property rights belong to phase 2 are mortgaged at Vietcombank Thanh Cong (Hanoi).
Increasing loans to invest in new project in addition to large scale of previous loans make the total loans of the group reach over $938 million which accounts approximately 31 per cent of its total assets. Its interest expense after the first nine months of 2018 rose by 14 per cent to $16.8 million.
In the coming quarters, Hoa Phat's debt will continue to be higher and higher as the Dung Quat project is completed and put into full operation. Hoa Phat recently made a deal with a group of banks including BNP Paribas, HSBC, Malaysia's MayBank, China's ICBC and Bank of China but the value was not disclosed.
Dung Quat complex has a designed capacity of four million tons of steel per year, double the capacity of Hoa Phat's existing Hai Duong steel plant. It expected to consume four million tons of steel per year and continue to maintain the leading position in the domestic steel market with about 30 per cent of market share.
