VinaCapital said in a statement that due to some misunderstandings, VinaCapital decided to withdraw its investment in Ba Huan. The two parties are discussing the conclusion of this deal based on the law and harmonious interests.
According to VinaCapital, the terms agreed by the two parties are in compliance with the market practices and Vietnam’s law.
"We agreed on the investment with a valuation much higher than the market valuation following price-to-earnings basis," VinaCapital disclosed.
According to VinaCapital, official contracts were drafted in English and thoroughly reviewed, then signed by all parties in February.
Official contracts and all important relevant documents were translated into Vietnamese without any difference in content between English and Vietnamese versions.
Previously, Ba Huan had received the terms sheet in English and the Vietnamese translation for comparison and review of all core terms that would be included in the official contracts before the terms sheet was signed in October 2017.
"It took six months to negotiate, draft and sign official contracts. As far as we know, during this time, Ba Huan had consulted a number of professional consultancy firms. Therefore they fully understand the obligations they undertook to perform," added VinaCapital.
Earlier this year, Vietnam Opportunity Fund (VOF), a flagship of VinaCapital, invested $32.5 million to acquire a significant minority stake in Ba Huan and planned to purchase additional stake within 12 months.
However, less than half a year later, local media reported that Ba Huan asked the Prime Minister’s intervention in terminating the investment partnership with VinaCapital.
Accordingly, VinaCapital included terms in the contract in which if Ba Huan cannot reach the targeted business results, the firm will be fined or required to return the investment capital together with the interest rate of 22 per cent or shall transfer to VinaCapital (or its designated partner) at least a 51-per cent stake in the firm.
Ba Huan said that VinaCapital intention was to take over the firm and dispossess of Ba Huan brand rather than cooperation. At the same time, VinaCapital "delayed and caused difficulties" in terminating investment partnership with Ba Huan when it was advised.
Ba Huan is one of the largest egg and poultry producers in the country. The firm accounts for a 30-per cent market share of egg production in Vietnam and expects revenue for 2018 to reach more than US$90 million.
Each day, Ba Huan supplies over 1.7 million eggs, delivers over 15,000 chickens, and processes over 25 tonnes of fresh poultry meat. Its products are distributed to over 2,000 agents and points of sales throughout Vietnam.
Established in 2001, Ba Huan owns two poultry farms, including a layer farm with over 1.5 million chickens for commercial egg production, and a broiler farm with over 400,000 chickens for meat production.