Novaland’s Strategic Move: Share Issuance for Debt Conversion
On August 7, 2025, it was announced that Novaland, one of Vietnam’s leading real estate developers, is planning a significant financial maneuver by issuing nearly 152 million new shares. This audacious move aims to facilitate the conversion of over VND6 trillion (approximately $228.8 million) worth of bond principal. This initiative highlights Novaland’s ongoing challenges and strategies in navigating the turbulent waters of the real estate market in Vietnam.
Pricing and Market Strategy
The newly issued NVL shares are set to be offered at a price of VND40,000 (around $1.53) each. Notably, this price point is more than double the closing price of VND18,200 on the Ho Chi Minh Stock Exchange just prior to this announcement. The strategic pricing reflects a calculated approach by Novaland’s leadership, taking into consideration anticipated favorable market conditions and favorable bondholder support.
Shareholder Engagement
To formalize this plan, Novaland is looking to secure the backing of its shareholders at an upcoming extraordinary general meeting. The company’s proposal indicates that the debt in question comprises 13 bond codes issued between 2021 and 2023, predominantly maturing between 2023 and 2025. These bonds largely consist of private debt that has remained unresolved due to ongoing business adversities faced by the company.
Business Context
For some context, Novaland has encountered significant challenges over recent years, primarily compounded by an inability to meet debt repayment obligations. The pressures of the market have been palpable, with a reported loss of VND666 billion (approximately $25.4 million) in the first half of 2025. The company’s total debt now stands at over VND61.8 trillion (around $2.36 billion), a staggering amount that underscores the urgency of its financial restructuring efforts.
Optimism Amid Challenges
However, amidst these challenges, a representative from Novaland expressed optimism regarding a recovery. Following the resolution of several legal hurdles affecting their projects in the second quarter of 2025, the company believes that with continued support from partners and financial institutions, they are on the path to recovery. The management’s enthusiasm about an eventual rebound signals a forward-looking approach despite past difficulties.
Seeking Regulatory Approval
If the shareholders approve the issuance, Novaland plans to escalate the proposal to the State Securities Commission (SSC) for review. The company has constructed a timeline targeting implementation as early as 2026, with the new shares projected to undergo a one-year lock-up period. Should this plan succeed, Novaland’s charter capital is expected to increase to over VND21.02 trillion (around $801.66 million), representing a significant uptick in its capital structure.
More Than One Plan
In addition to the current plan, Novaland is working on a separate proposal to issue over 168 million shares at VND15,747 each, aimed at restructuring approximately VND2.65 trillion (about $101 million) in debts. This earlier announcement illustrates Novaland’s broader strategy to address its pressing financial obligations and improve liquidity.
Shareholder Influence and Future Projections
Should both issuance strategies come to fruition, the shareholding group associated with Bui Thanh Nhon, Novaland’s chairman, would increase its stake from 37.48% to 42.428%, edging ever closer to a critical threshold for veto power during shareholder meetings. This elevation of ownership could dramatically impact decision-making within the company, creating strategic advantages as it navigates its recovery.
Ongoing Financial Landscape
Despite signs of recovery, Novaland’s financial landscape remains precarious. The company continues to grapple with high expenses and stringent cash flow, illustrating that while revenue may have improved, the overall operational health is under strain. The search for further restructuring options continues, targeted for implementation between late 2026 and early 2027 in hopes of alleviating long-standing financial burdens.
Conclusion
In summary, Novaland’s proactive measures to issue shares for debt conversion reflect not only an attempt at financial recovery but also a complex navigation of the real estate market’s challenges. As the company strives for stability and growth, its leadership remains hopeful for a flourishing future, driven by strategic decisions and supportive shareholders.