Ahead of its 2024 annual general meeting of shareholders (AGM), the Board of Directors of No Va Real Estate Investment Group (Novaland, stock code: NVL) has announced plans to issue 1.1 billion shares to existing shareholders in the form of purchase rights. The preemptive right ratio is 10:6 (shareholders with 10 shares are entitled to purchase 6 new shares).
The offering price will be VND 10,000 per share, equivalent to 67.5% of the current market price of NVL shares. Notably, since the beginning of April, the share price has decreased by nearly 20%. After the issuance, Novaland’s charter capital is expected to increase by VND 19,501 billion to over VND 31,200 billion. The implementation period is expected to be from Q2/2024 to Q4/2024.
With the estimated VND 11,700 billion proceeds from the transaction, Novaland plans to use VND 10,566 billion to contribute capital to its subsidiaries. In addition, the company will also use over VND 855 billion to pay off debt, VND 140.3 billion to pay salaries, and VND 138.8 billion for company operations.
At the shareholder meeting held on April 25, Novaland’s shareholders raised concerns that the capital increase with such a large number of shares could dilute and further depress the NVL share price. Addressing this issue, Mr. Duong Van Bac, the company’s CFO, stated that compared to the period before the crisis, NVL shares have now decreased by 80% – 90%. This is also a significant decline in the market and reflects the difficulties the company has faced in the recent past.
Moreover, the fact that Mr. Bui Thanh Nhon’s group of shareholders has had to continuously sell NVL shares to help the company pay off its debts has also affected the share price.
“Up to this point, the company’s overall situation has witnessed positive changes compared to the end of 2022 and early 2023, as shared by the company’s leadership earlier. In the restructuring roadmap, raising new capital is the foundation for the group to have additional financial resources, to steadily overcome the crisis stage, and to accelerate the recovery of business activities” , said Mr. Duong Van Bac.
According to Mr. Duong Van Bac, major partners are also interested in investing in Novaland in the form of private placement due to their belief in the company’s existing foundation. In addition, this investor is also confident in the recovery capability and future growth potential of the Group.
In fact, even with the structure of the recently issued international convertible bond, the investor agreed to a conversion price of VND 40,000 per share, almost 3 times higher than the current price. However, for the time being, Mr. Duong said that Novaland’s leadership will prioritize the purchase rights for existing shareholders at a price lower than the market value
“This is also a way to ensure the interests of existing shareholders, who have accompanied and stayed with the Company throughout the recent period. If there is any surplus in the distribution, we will then consider allowing new shareholders to participate” , affirmed Novaland’s CFO.
Mr. Duong Van Bac believes that the successful issuance will provide a solid foundation for Novaland to quickly return to growth trajectory, increase the company’s value in general, and thereby increase the value of shareholders’ investments in the Company. This leader believes that this is the most meaningful way to express gratitude to the community and to the people who are the owners of the company.
In addition to raising capital from private placement, Novaland also plans to raise VND 16,000 billion from financial institutions to develop projects and business operations this year.
