Recently, Saigon Tourist Transportation Joint Stock Company – Satraco (STT: UPCOM) held its 2024 Annual General Meeting of Shareholders.
According to the minutes of STT’s 2024 Annual General Meeting, there were two opposing opinions throughout the meeting. The proposals, voting, and financial reports consistently had approximately 52.8% approval and 47.1% disapproval.
As per the audited 2023 Consolidated Financial Statements, STT continued to incur business losses, resulting in accumulated losses of over VND 108 billion. This has led to a qualified opinion from the auditors, as STT’s equity has turned negative by over VND 28 billion. The company’s ability to continue as a going concern heavily relies on the management’s operational decisions and financial support from related parties. However, the auditors have not been provided with commitments for financial support to STT from these related parties.
STT, originally a state-owned enterprise, was privatized in 2004 and listed on the HoSE exchange under the ticker symbol STT. In July 2018, the company was delisted from HoSE and moved to the UPCOM exchange.
As a former state-owned enterprise, STT also owns several prime locations in Ho Chi Minh City, including the properties at 25 Pasteur and 99C Pho Quang streets.
Since 2010, STT has entered into a joint venture agreement for the 99C Pho Quang land plot with Dat Viet Financial Investment JSC.
Contributing Prime Real Estate
According to the investment cooperation contract signed in June 2010 between STT and Dat Viet, STT would transfer the entire land area of 99C Pho Quang (Ward 2, Tan Binh District, Ho Chi Minh City), spanning 9,252 square meters, to Dat Viet for the development of a luxury apartment and office building project.
Both parties agreed to establish a new company to undertake the project on the 99C Pho Quang land plot.
By contributing the prime real estate at 99C Pho Quang to the joint venture, STT would receive VND 15 billion in relocation and compensation support. Additionally, the project company would pay STT a fixed annual dividend of VND 3.2 billion once the project is officially put into operation.
To facilitate a swift project launch, Dat Viet agreed to advance STT four years’ worth of fixed annual dividends, totaling VND 12.8 billion.
In November 2010, STT handed over the 99C Pho Quang site to Lac Hong Real Estate, who then appointed Mr. Tran Van Thanh to oversee, manage, and utilize the assets while awaiting project approval from the authorities.
According to Ho Chi Minh City’s Department of Natural Resources and Environment, STT’s transfer of the land to Lac Hong Real Estate was not in compliance with Decision No. 6619/QD-UBND dated December 30, 2005, issued by the Ho Chi Minh City People’s Committee, and violated Point a, Clause 1, Article 188 of the 2013 Land Law.
Delay and Proposed Revocation
In June 2011, the Ho Chi Minh City Department of Finance, through its Official Letter No. 6530/STC-NS, announced the land use fee that STT had to pay to the state budget for changing the purpose of using the land at 99C Pho Quang to build apartments for sale and commercial services, amounting to VND 254.789 billion. However, as of October 2012, STT had not yet paid this amount into the state budget.
For several years, the project on the prime land plot at 99C Pho Quang failed to materialize, and the site was rented out to individuals and organizations, which was not in accordance with the regulations.
In May 2016, the People’s Court of Tan Binh District issued Notification No. 161/2016/TB-TLVA regarding STT’s lawsuit against Dat Viet, requesting the cancellation of the investment cooperation contract signed on June 17, 2010, and demanding that Dat Viet return the 99C Pho Quang land plot.
In September 2016, the Ho Chi Minh City Department of Natural Resources and Environment signed Appendix No. 9035/PLHD-STNMT-QLD to adjust the land lease contract No. 2751/HDTD-TNMT-DKKTD dated 2006, stating that “the land lease term: short-term annually until October 24, 2016.”
Subsequently, in December 2016, the Ho Chi Minh City Department of Natural Resources and Environment issued Notification No. 13585/TB-TNMT-VP on the results of the inspection and handling of delayed projects. The 99C Pho Quang project was among those recommended for approval by the Ho Chi Minh City People’s Committee for a one-year extension to complete the investment procedures. If the unit failed to implement the project within 12 months from the date of the approval, the Department of Natural Resources and Environment was authorized to propose the revocation of the project in accordance with the regulations.
Consequently, in June 2018, the Department of Natural Resources and Environment sent Official Letter No. 6083/STNMT-TTR to the Ho Chi Minh City People’s Committee, recommending against extending the deadline for the 99C Pho Quang project. The letter also requested the termination of land and asset leasing on this site.
According to the Business Registration Office under the Ho Chi Minh City Department of Planning and Investment, as of March 15, 2023, in addition to Lac Hong Real Estate, there were 12 other units based at 99C Pho Quang, two of which had ceased operations.
According to our sources, Dat Viet Financial Investment JSC, chaired by Mr. Cao Minh Son, was established in 2007. However, in January 2021, the company had its business registration certificate revoked.
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