HO CHI MINH CITY: VinFast Auto Ltd says its planned sale of two Vietnamese factories will enable the electric vehicle (EV) maker to shed about 182 trillion dong (US$6.9bil) in debt and obligations while potentially speed its path toward profitability.
“After restructuring, VinFast will essentially be debt-free, with only a small amount remaining,” the company said in an emailed statement responding to Bloomberg’s questions.
Founder Pham Nhat Vuong – who is also Vietnam’s richest man – said last month he expected VinFast to hit earnings before interest, taxes, depreciation and amortisation breakeven point in 2027.
The company declined to provide a timeline for reaching profitability after the spin-off but said it expects to generate a profit in its domestic market in 2027, according to the statement.
“This is a strategic pilot model for VinFast,” the struggling EV maker said in the statement.
“If the model proves effective, we will continue to scale and expand it.
“If challenges arise, we remain prepared to make the necessary adjustments.”
Under the restructuring announced May 12, VinFast will separate its manufacturing operations into a standalone company, effectively outsourcing production at its plants in the northern port city of Haiphong and the north-central province of Ha Tinh.
The move would also allow the facilities to manufacture vehicles for other automakers, though VinFast said its own orders will be prioritised.
It will retain its overseas production operations at factories in India and Indonesia.
The manufacturing operations are housed under VinFast Trading and Production JSC, or VFTP, and VinFast plans to transfer its entire stake in the unit – valued at about 13.3 trillion dong – to a buyer group led by Future Investment Research and Development JSC, with Vuong also participating as a minority investor, according to a filing.
Following the transfer, Future Investment will hold 95.5% of VFTP, while Vuong will own less than 5%.
The buyer group will also assume borrowings, bonds, finance leases, payables and other obligations tied to VinFast’s manufacturing operations.
Future Investment, formerly known as Novatech R&D JSC, was spun out of VFTP last year to hold intellectual property assets before being sold to Vuong for about US$1.5bil.
Vuong later divested his stake in the firm. — Bloomberg
