Nghe An: Looking for strategic investors for agricultural and forestry companies

(Baonghean) - Implementing the Government's direction on reorganizing, innovating and developing, and improving the operational efficiency of agricultural and forestry companies, Nghe An is urgently implementing the reorganization and equitization of these companies.

The Prime Minister has approved the Master Plan for the arrangement and renovation of agricultural and forestry companies under the People's Committee of Nghe An province (Document No. 321/TTg-DMDN dated February 26, 2016), including the equitization of 3 agricultural LLCs: Nghe An Tea Development Investment, Coffee Rubber, and 3/2 Agriculture and Industry.

The Prime Minister assigned the People's Committee of Nghe An province to be responsible for determining the proportion of State capital that needs to be held in joint stock companies according to the provisions of Decree No. 118/2014/ND-CP of the Government and the actual situation.

Tea harvesting in Hung Son commune (Anh Son). Photo: Thu Huyen

Mr. Nguyen Van Lap - Deputy Director of the Department of Agriculture and Rural Development said that, based on the direction of the Prime Minister, the Department of Agriculture and Rural Development has proposed the Provincial People's Committee to consider and submit to the Standing Committee of the Provincial Party Committee a plan to reorganize and reform 3 enterprises in the form of equitization, the State does not hold controlling shares. In which, Nghe An Tea Investment and Development Company Limited: The State holds 35% of shares; Coffee and Rubber Company Limited: The State holds 35% of shares; 3/2 Agricultural and Industrial Company Limited: Issue additional shares to implement equitization, the State holds 30% of shares.

Nghe An Tea Development Investment Company Limited has 8 member units, including tea processing and service enterprises: Con Cuong, Bai Phu, Hung Son, Anh Son, Hanh Lam, Ngoc Lam, Thanh Mai and Vinh Tea Enterprise. The total land area assigned by the Provincial People's Committee to manage and use is 4,303.64 hectares; the area re-measured in 2016 is nearly 5,118 hectares. The total number of employees is currently 870 people. Total asset value is 62.5 billion VND, state capital is 21.7 billion VND. The Company has developed a Project for arrangement and conversion in the form prescribed in Clause 2, Article 4, Decree 59 of the Government on converting 100% state-owned enterprises into joint stock companies, specifically: The State holds 35% of shares, preferential shares sold to employees are 8,680 million VND, accounting for 40%, and shares sold to strategic investors and other investors are 5,430,000 million VND, accounting for 25%.

Rubber latex exploitation at 3/2 Agricultural and Industrial One Member Co., Ltd. Photo: Thanh Duy

Similarly, the Rubber Coffee Company Limited has 6 member units located in Nghia Dan district and Thai Hoa town, including the following farms: Tay Hieu 1, 2, 3, Dong Hieu, Co Do and the Rubber Coffee Purchasing and Processing Enterprise; the total area assigned for management and use is more than 4,000 hectares. The total number of employees is 2,011 people; the total value of assets is 50.6 billion VND, the state capital is 22.0 billion VND. Form of arrangement and conversion: The state holds 35% of shares, preferential shares sold to employees are 8,800 million VND, accounting for 40%, and shares sold to strategic investors and other investors are 5,500 million VND, accounting for 25%.

For the 3/2 Agricultural Industry One Member Co., Ltd., the form of arrangement and conversion is in accordance with Clause 1, Article 4, Decree 59/2011/ND-CP dated July 18, 2011 of the Government on converting 100% state-owned enterprises into joint stock companies "Maintaining the existing state capital in the enterprise, issuing additional shares to increase charter capital". Specifically: Issuing an additional VND 1,855 million in shares, raising the equitization capital to VND 16 billion to implement equitization, the state holds 30% of shares, preferential shares sold to employees are VND 7,200 million, accounting for 45%, shares sold to strategic investors and other investors account for 25%. However, currently, finding strategic investors for these companies is still difficult.

The most important issue after equitization is land management and use. Accordingly, joint stock companies must manage and use land according to the land use plan approved by competent authorities in Decree 118/2014/ND. If they do not do so, the land will be revoked. The new legal entity (joint stock company) inherits the obligations of the old legal entity (single member LLC) to perform the contract signed with the contractor until the contract expires or to liquidate the contract before the deadline when there is an agreement between the two parties.

Currently, the 2013 Land Law, Decree No. 118/2014/ND-CP on arrangement, innovation and development, improving the operational efficiency of agricultural and forestry companies, Decree No. 59/2011/ND-CP dated July 18, 2011 of the Government on converting 100% state-owned enterprises into joint stock companies and a number of other documents still have shortcomings that are being reviewed, revised and supplemented by the Government for appropriateness. Therefore, the value of land use rights, land allocation and lease terms, land rental prices regulated by the State (stable price list for 5 years)... are also being calculated by relevant departments and branches when implementing equitization.

Viet Phuong