Quốc Cường Gia Lai Sells Subsidiary to Settle Debts with Trương Mỹ Lan

Quoc Cuong Gia Lai Joint Stock Company (stock code: QCG) has announced a Board of Directors Resolution approving documents for a written shareholder consultation. The consultation period will end on December 16th.

Accordingly, QCG’s Board of Directors has submitted a proposal to shareholders regarding financial restructuring to settle a debt arising from a promise-to-purchase contract for the Bac Phuoc Kien Residential Area project with Sunny Island Investment Joint Stock Company, an entity associated with Ms. Truong My Lan.

Regarding the payable amount of over VND 2,882 billion to Ms. Truong My Lan, QCG affirms that the promise-to-purchase contract for the Bac Phuoc Kien Residential Area project was executed in full compliance with legal regulations, and the company has received more than VND 2,882 billion from Sunny Island.

Due to the partner’s breach of agreement, QCG filed a lawsuit with the Vietnam International Arbitration Center (VIAC). VIAC previously ruled that the company could terminate the contract and demanded the partner return all land clearance documents for the project.

However, the Ho Chi Minh City People’s Court later overturned the arbitration decision as these documents were considered evidence in a criminal case. In late December 2024, the High People’s Court in Ho Chi Minh City issued an appellate judgment, compelling QCG to repay the amount of over VND 2,882 billion to retrieve these documents.

In compliance with the enforcement decision, QCG has to date paid VND 1,100 billion to the enforcement agency, primarily through advance revenue from the transfer of hydropower plants and personal loans.

In 2025, the company’s financial situation is facing challenges due to the overall real estate market conditions, unresolved legal issues with projects, and lower-than-expected inventory sales. To secure funds for the remaining payment, QCG proposes to transfer capital contributions in its subsidiaries and affiliated companies, provided that the transfer value is not lower than the initial investment cost.

The transfer is to be executed within 2025, and the value must not be less than the investment cost. The company will engage an independent valuation firm to assess and determine the transfer value.

Regarding the transferee, QCG states that it can be any partner, investor, including related parties, with sufficient financial capacity to ensure payment, adhering to the principles of equality, voluntariness, and mutual benefit.

Additionally, QCG will collaborate on investment and business ventures for real estate products and projects under its ownership with capable and interested investors, including related parties.

Quoc Cuong Gia Lai also proposes to shareholders to authorize the Board of Directors to perform related tasks within their functions, duties, and authority, including deciding on specific transaction details to align with actual conditions.

Settling the remaining debt is deemed essential by Quoc Cuong Gia Lai to ensure normal operations and prevent enforcement agencies from taking coercive measures that could result in asset losses.

Previously, QCG’s Q3 financial report indicated a significant payment to Sunny Island Investment Joint Stock Company related to the aforementioned debt. As of September 30th, the outstanding debt for the Phuoc Kien project was VND 1,982 billion, a reduction of nearly VND 900 billion from the VND 2,882 billion recorded at the beginning of the year.

However, alongside the decrease in debt to Sunny Island, QCG’s payables to other related parties surged from VND 179 billion at the start of the year to VND 1,197 billion after nine months.

The sharp increase in payables is primarily due to QCG borrowing from relatives of the company’s leadership. Specifically, Quoc Cuong Gia Lai borrowed VND 507 billion from Ms. Lai Thi Hoang Yen, the daughter of QCG’s Chairman Lai The Ha, and over VND 527 billion from Mr. Lau Duc Duy, the brother-in-law of QCG’s CEO Nguyen Quoc Cuong. Mr. Cuong himself lent QCG VND 30 billion, and his sister, Ms. Nguyen Ngoc Huyen My, lent VND 50 billion.

QCG’s debt to Sunny Island Investment Joint Stock Company totals over VND 2,882 billion, scheduled to be repaid over two years, concluding in Q1 or Q2 of 2027. QCG also plans to consider early settlement if financial conditions permit.

In Q3 of this year, QCG’s revenue decreased by 37% to VND 111 billion, primarily due to reduced apartment handovers. During this quarter, the real estate segment contributed approximately VND 45 billion, a nearly 60% decline compared to Q3 of the previous year.

For the first nine months of this year, QCG achieved revenue of VND 354 billion (up 46%) and pre-tax profit of VND 46 billion (over four times higher than the same period last year and the highest since 2019). However, these figures fall significantly short of the annual business plan of VND 2,000 billion in revenue and VND 300 billion in pre-tax profit.

As of September 30th, QCG’s total assets were VND 8,700 billion. Cash and bank deposits amounted to VND 154 billion, inventory was VND 1,170 billion, and loans remained at approximately VND 360 billion.