Bamboo Airways Soars as Vietnam’s Largest Airline with Transformed Debt and Increased Charter Capital

Bamboo Airways, one of the biggest airlines in Vietnam, has successfully converted 7.72 trillion VND of debt into equity, making it the airline with the largest charter capital in Vietnam. This achievement surpasses Vietnam Airlines, which previously held the title with 22.143 trillion VND in charter capital.

The extraordinary shareholders’ meeting held on May 9, 2023, approved the proposal to increase the charter capital by an additional 11.5 trillion VND, as suggested by Mr. Le Thai Sam. This includes 7.72 trillion VND issued to convert debt and 3.78 trillion VND issued for strategic investors.

According to Mr. Sam’s proposal, Bamboo Airways borrowed 7.7278 trillion VND (including principal and interest) at no interest or low interest rates, without any collateral. This amount is nearly equivalent to the capital increase for debt conversion by Bamboo Airways.

The leadership of Bamboo Airways announced the completion of the equity capital increase through the debt-to-equity conversion.

As of May 10, 2023, Mr. Le Thai Sam, as an individual, owned 231.7 million BAV shares. Therefore, after the aforementioned debt conversion, Mr. Sam acquired an additional 772 million shares, bringing the total number of shares held to over 1 billion, equivalent to a 38% stake based on the new charter capital.

Furthermore, prior to this, the Board of Directors of FLC Corporation (FLC) decided to transfer its entire stake of 401.5 million BAV shares to Mr. Le Thai Sam.

After the completion of the share transfer, Mr. Sam will hold over 1.4 billion shares, increasing his ownership stake in Bamboo Airways to 53.6% based on the current charter capital of 26.22 trillion VND.

According to the information we have obtained, Mr. Sam has pledged 217 million BAV shares from Bamboo Airways as collateral at a bank. Additionally, at another branch of the same bank, Mr. Sam has pledged an additional 17.46 million BAV shares as collateral to secure loans totaling 52.38 billion VND. The valuation for BAV shares is set at 3,000 VND per share.

Another shareholder, NCB Bank, is seeking shareholders’ opinions through written consent regarding the transfer of its entire stake of 203 million BAV shares, which serve as collateral for previous loans. This will further impact the ownership structure within Tre Viet (Bamboo Airways).

It is worth noting that Mr. Le Thai Sam has submitted his resignation as a member of the Board of Directors of Bamboo Airways. The Board of Directors will present this matter to the shareholders for approval at the upcoming annual general meeting.

According to the leadership of Bamboo Airways, the charter capital reached 26.22 trillion VND as of May 2023, reducing the debt-to-equity ratio. The financial leverage ratio decreased to 0.7 times the equity.

By the end of , Bamboo Airways had negative equity of 836 billion VND due to a significant loss of 17.6 trillion VND in , primarily attributed to provisions for difficult-to-collect receivables and investment provisions in affiliated companies totaling over 13.2 trillion VND. With the increase of 7.72 trillion VND in charter capital compared to the beginning of the year, and assuming the airline’s business operations in the first five months of the year are either profitable or not heavily loss-making, there is a high possibility of reversing the negative equity situation.