October 13, 2023 | 6:54 p.m. GMT+7
Palace Saigon Hotel operated by Bong Sen Corp in District 1 of Ho Chi Minh City. Photo courtesy of the company
Real estate company Bong Sen, which is under investigation for its dealings with disgraced property developer Van Thinh Phat Group, owes nearly VND5.47 trillion ($223.77 million) in defaulted bonds .
The delay in repaying the bonds comes as Bong Sen’s assets were frozen last year when police said it was one of 762 companies affiliated with Van Thinh Phat, whose executives were arrested last year for fraud.
Bong Sen issued the bonds in October 2021 and the issuance was organized by Tan Viet Securities, a company that consulted An Dong Company, a subsidiary of Van Thinh Phat.
The issue was worth VND4.8 trillion with a coupon rate of 10.5% per annum. Its maturity was initially set at five years, but was later postponed to June this year. The coupon now stands at 670 billion VND.
Bong Sen issued bonds to develop real estate projects in District 5 of Ho Chi Minh City.
The company used money raised for a project with another company, Vina Alliance, to develop an office complex, shopping center and residential complex at 152 Tran Phu, District 5.
But the project was then stopped after an inspection by the authorities. Bong Sen has not been able to contact the leaders of the Vina Alliance since November last year and therefore has not collected the money needed to buy back the bonds.
Bong Sen executives said at an extraordinary general meeting in August that the company would use its existing assets, including hotels and restaurants, to buy back the bonds.
Bong Sen was originally a subsidiary of the state-owned tourism company Saigontourist and was capitalized in 2005.
It owns prime land in HCMC, where it operates hotels and restaurants.
Bong Sen chairman Vu Thi Hong Hai earlier said the company was awaiting the conclusion of an investigation into its dealings with Van Thinh Phat.
Truong My Lan, chairwoman of Van Thinh Phat, was arrested in October last year for alleged fraud related to the issuance and trading of bonds worth billions of dong (VND 1 trillion = $41.87 million).
She established Van Thinh Phat in 1992 as a restaurant and hotel operator before moving into real estate development.
The company carries out many projects in prime locations in Ho Chi Minh City.