Petrolimex earns nearly 4,000 billion VND in deal with Japanese partner

The Petroleum Group will offer 8% of its capital to JX Nippon Oil & Energy at a price no lower than VND38,000 per share, thereby obtaining funds to restructure its subsidiary in Singapore, which is making huge losses.

The above information was given at the 2016 Annual General Meeting of Shareholders of the Vietnam National Petroleum Group (Petrolimex) on the morning of March 30. Chairman of the Board of Directors Bui Ngoc Bao proposed a plan to issue shares to increase charter capital through a capital offering to Japanese strategic partner JX Nippon Oil & Energy Corporation. Accordingly, in the first phase, Petrolimex will offer 103.5 million common shares to JX, with a selling price of no less than VND38,000 per share. With this price, Petrolimex will collect at least VND3,934 billion. Thus, Japanese partner JX will hold 8% of the Group's capital.

Many small shareholders are worried about being disadvantaged when giving preferential shares to Japanese partners from 2015 profits.

After this round, JX will be issued more than 155 million redeemable preferred shares. These shares do not have voting or election rights... The source to issue these preferred shares to JX and existing shareholders comes from undistributed profits in 2015. Regarding this, many shareholders are worried about being disadvantaged compared to their partner JX. "In 2015, JX did nothing to receive bonus shares. In my opinion, this is due to our negotiation techniques," said a shareholder named Kien.

Another middle-aged female shareholder also said that during the negotiation, they should not have been allowed to enjoy preferential shares from the 2015 profit like that. Instead, according to this shareholder, the selling price could have been reduced a little instead of 38,000 as proposed.

Regarding these concerns, Chairman of the Board of Directors Bui Ngoc Bao said that JX's right to receive preferential shares is in accordance with the law. "According to the law, all shareholders who own shares before the record date are still entitled to receive dividends. In particular, this is a private issuance, so it is also one of the components of the contract," he said.

Mr. Bao also informed that the deal with JX had been negotiated for nearly 2 years, initially planning to sell 20% of capital, but due to many market difficulties, the group had to recalculate and the ownership ratio was only 8%.

After holding 8% of the capital (through the first issuance), JX also had a representative, Mr. Hitoshi Kato - Vice President of the Southeast Asia Business Development Department, join the Board of Directors of Petrolimex. The Chairman of Petrolimex said that this clause was also stipulated in the contract during the negotiation. Although this deal has not been finalized and JX has not actually held the capital of the Corporation, the Board of Directors has submitted a proposal to elect Mr. Kato as a member. Therefore, when voting on this content, many small shareholders said that this election method is "not in accordance with the procedure" and the law, so it should be postponed.

Therefore, the representative of the Board of Directors, Mr. Bao, said that he will ask for shareholders' opinions to approve the policy of allowing JX to send a representative to the Board of Directors instead of electing Mr. Hitoshi Kato.

According to the Board of Directors' proposal, the charter capital after the increase will be partially supplemented to balance capital for member units as well as to restructure the finances of Petrolimex Singapore Company. Currently, Petrolimex's Singapore unit is losing thousands of billions of VND. Although the Shareholders' Meeting still approved the proposal to use this capital to "save" Petrolimex Singapore, many shareholders are still concerned. "The company in Singapore has lost a huge amount of thousands of billions, which is very painful. Of course, the group is struggling to find a way to compensate for the loss in accordance with the principles, but in my opinion, it should not be allowed to lose money," a female shareholder expressed.

JX Nippon Oil & Energy was established in 2010, headquartered in Tokyo, operating in the fields of oil refining, selling oil and petroleum products, importing and trading gas and coal. Petrolimex is the unit that sells more than half of Vietnam's petroleum products. According to signed agreements, JX will support Petrolimex in terms of expertise such as gas station management systems and payments./.