Former Chairman Ha Van Tham's Group is in Crisis

The Board of Directors of Ocean Group Joint Stock Company (Ocean Group, stock code: OGC) has just announced that it has rejected the request for an extraordinary Board of Directors meeting from two members, Ms. Nguyen Thi Lan Huong and Hoang Thi Phuong Lan.

The reason for convening the extraordinary meeting was to approve the dismissal of a series of important positions at OGC, the use of the seal and discuss the duties of the members of the Board of Directors. However, OGC, represented by Chairman Le Quang Thu, rejected this request on the grounds that the Board of Directors had already held a meeting and some of the meeting contents had been answered in writing before.

This incident, in fact, is just an extension of the tensions from the 2018 annual meeting related to the executive board personnel and shareholder structure of Ocean Group. The controversy over the shareholder rights of Ha Bao Private Enterprise (a company related to former Chairman Ha Van Tham), conflicts within the executive board, and a series of issues related to business operations make the future of Ocean Group unpredictable.

Ocean Group, the company associated with the name of former Chairman Ha Van Tham, has been struggling to find a way out since the company's leaders got into trouble with the law four years ago.

In 2013, before the high-level personnel incident, Ocean Group's total assets reached more than VND11,400 billion with undistributed profits of nearly VND100 billion. However, in 2014, the company recorded a loss of more than VND2,200 billion. Four years later, OGC's total assets fell by more than half compared to before the incident, with accumulated losses increasing to nearly VND2,900 billion, eroding nearly 97% of its charter capital.

After four years of crisis, the rare bright spot that investors saw in this company was the gradual liquidation of assets to overcome difficulties. The Tran Duy Hung - Khuat Duy Tien land plot of the subsidiary was transferred by OGC to a real estate development partner in 2015. Thanks to the sudden profit of nearly 700 billion VND that year, the company's accumulated losses tended to narrow.

However, 2015 was also the only year OGC made a profit since the incident. With no significant assets left to liquidate, the chorus of losses returned to the enterprise once considered a large multi-industry corporation in Vietnam.

In 2016 and 2017, OGC reported losses of VND728 billion and VND465 billion, respectively. In the first half of 2018, the company continued to lose another VND10 billion. Although it has decreased sharply compared to the same period, the continued loss reporting has made the "delisting death sentence" of the company imminent.

At the end of September, with more than 3 months left to finish the 2018 fiscal year, Ocean Group's board of directors presented a plan to adjust this year's business plan. According to the new plan approved by the Board of Directors, Ocean Group's consolidated profit after tax in 2018 is expected to be 58 billion VND compared to the pre-adjusted plan of 186 billion VND, equivalent to a decrease of nearly 70%. Consolidated revenue is also adjusted down nearly 16% to 1,172 billion VND.

Despite the sharp decrease, this figure is still a real challenge. Not only because of the unprofitable business results in the first half of the year, but this enterprise is also facing tensions related to the board of directors and a group of shareholders related to former Chairman Ha Van Tham.

Ha Bao Private Enterprise and Mr. Ha Van Tham - the largest shareholder group at Ocean Group with more than 72 million shares, equivalent to about 24% of capital - did not have their shareholder rights approved at the 2018 annual meeting.

According to a document sent to Ocean Group by the Civil Judgment Enforcement Agency on August 14, nearly 69 million OGC shares owned by Ha Bao and 3.3 million shares owned by Ha Van Tham were seized by the authorities to enforce the judgment. According to the representative of Ocean Group at that time, Ha Bao and the representative of Ha Van Tham no longer had shareholder rights at the meeting.

Ha Bao and its lawyer representative protested this decision at the same time but it was not approved by the OGC Board of Directors. However, just nearly two months after the meeting was held, the Ba Dinh District Court issued a decision to apply temporary emergency measures forcing Ocean Group to temporarily suspend the implementation of the resolution of the 2018 Annual General Meeting of Shareholders. This decision was made after the court considered the application of Ha Bao Private Enterprise.

Ocean Group immediately filed an appeal against this decision. However, the continuous legal disputes made determining the shareholder rights of people related to Mr. Ha Van Tham more complicated. At the same time, there was disagreement among the Board of Directors when the group related to former Chairman Ha Van Tham made many requests for company restructuring.

The tension of the disputes is getting higher and higher, while Ocean Group's business activities are still in crisis, making the future of this enterprise uncertain. On the stock exchange, each OGC share is currently trading at only 3,000 VND, equivalent to the capitalization value of Ocean Group of about 850 billion VND, a figure less than one-tenth of the group's peak.

Minh Son