Vietnamese industrial and civil contractor Hoa Binh Construction Group will issue 25 million shares to Hyundai Elevator.
The issuance, which was approved at Hoa Binh’s general shareholders meeting yesterday, will be conducted under private placement to strategic investors.
The construction company will issue 25 million in the second quarter of this year to Hyundai Elevator at the price of nearly $1 per share.
Hoa Binh Construction chairman Le Viet Hai said that the Korean’s investment was a positive signal as Hyundai Elevator accepted to buy the company’s share at a price higher than its market value, which is hovering at around 70 cents.
The proceeding of $25 million from the issuance will be used to supplement working capital for construction activities, procurement of machinery and equipment for business activities, or expanding business activities in foreign markets.
Under the agreement, Hoa Binh will support Hyundai Elevator to provide elevator and escalator products in projects that it participates as an investor or a contractor.
Hyundai Elevator will introduce Hoa Binh as a contractor for its customers in Vietnam and abroad, sending experts to support Hoa Binh in quality control, construction management of elevator system as a general contractor. Moreover, Hyundai Elevator is committed to providing advanced technological products at competitive prices and with the most favorable conditions.
Hoa Binh finance director Pham Ngoc Thach said that with $25 million from issuing shares to be added to its equity, the company will be able to borrow an additional $50 million from banks and as a result more than $70 million will be added to its business activities this year.
Hai said on the basis of a comprehensive market assessment, the company would build a cautious business plan this year, anticipating total revenue of $800 million and after-tax profit of $32 million, an increase of 1.6 per cent and 16 per cent year-on-year respectively. It aims to pay a dividend of 15 per cent.
The company has set the target of winning more than $1 billion in bidding this year. The group will expand business abroad, exploring new construction markets in Asia, Middle East, Canada and Australia.
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