HBC Debt-for-Equity Swap at 10,000 VND: 15% Dilution for Hoa Binh

Overview

Hoa Binh Construction Group (HBC), listed on UPCOM, has approved the issuance of more than 51.4 million shares at a par value of 10,000 VND each to swap debt held by 99 creditors. The conversion price is nearly three times HBC’s market close of 3,600 VND on 20 September 2026, a spread that puts dilution risk at the center of the transaction. The move follows a similar debt-to-equity conversion completed in June 2024 and is intended to ease balance-sheet pressure.

Key Facts

• HBC will issue over 51,410,000 shares at 10,000 VND per share, a 1:10,000 conversion ratio (one new share per 10,000 VND of debt).
• The conversion price is nearly 3x HBC’s market price of 3,600 VND at the open on 21 September.
• Charter capital rises from approximately 3,430 billion VND to more than 3,940 billion VND, an increase of about 15%.
• 99 creditors participate, mainly subcontractors and suppliers; Matec Construction Machinery will convert over 92 billion VND into more than 9.2 million HBC shares.
• Searefico Engineering & Construction swaps about 38 billion VND, Best Quality Construction nearly 33 billion VND, ATAD Steel Structure over 31 billion VND, Interhouse LA over 23 billion VND, and An Cuong Wood about 5 billion VND.
• In the prior conversion completed 28 June 2024, HBC issued 73,080,000 shares to swap nearly 731 billion VND of debt, including SMC’s conversion of over 104 billion VND into 10,480,000 shares.
• As of 30 June, HBC’s total assets were nearly 16,886 billion VND, liabilities 14,867 billion VND (about 88% of assets), and accumulated losses 2,026 billion VND (about 58% of charter capital).

What Happened

Hoa Binh Construction Group’s board approved a debt-for-equity swap under which 51.4 million new shares will be issued directly to creditors at a par value of 10,000 VND per share. The conversion ratio is 1:10,000, meaning each new share retires 10,000 VND of debt. Shares are subject to a one-year transfer restriction from the closing date of the issuance. The creditor list is dominated by subcontractors and suppliers of materials and equipment, including Matec Construction Machinery, Searefico Engineering & Construction, Best Quality Construction, ATAD Steel Structure, Interhouse LA, and An Cuong Wood.

According to HBC, the issuance is designed to reduce debt pressure, improve financial capacity, and support the company’s ability to continue as a going concern. Over the past two years, the group has converted nearly 1,200 billion VND of debt into equity. The current transaction follows a June 2024 issuance of 73.08 million shares that retired roughly 731 billion VND of debt, in which SMC Investment Trading (SMC) converted more than 104 billion VND into 10.48 million HBC shares. The article does not disclose the exact completion date of the new issuance.

Market Context

HBC trades on UPCOM and closed at 3,600 VND on 20 September 2026, the reference price used to highlight the gap with the 10,000 VND conversion price. The stock has been under pressure from accumulated losses of about 2,026 billion VND and a liability ratio near 88% of total assets. The construction and steel sectors have faced prolonged working-capital stress, and HBC’s reliance on supplier debt conversions reflects that environment. SMC, a listed steel trader on HOSE, is a prior participant in HBC’s debt swaps and remains a creditor counterparty in this restructuring channel.

Strategic Significance

For long-term investors, the transaction is a balance-sheet repair mechanism rather than a growth capital raise. Converting supplier payables into equity reduces near-term cash obligations and supports going-concern status, but it transfers risk to creditors who accept shares at 10,000 VND while the market values HBC at 3,600 VND. That gap implies creditors are effectively accepting a substantial mark-to-market loss in exchange for equity upside and the preservation of a commercial relationship. The 15% charter capital increase dilutes existing shareholders, and with accumulated losses at 58% of charter capital, the path to normalized profitability depends on revenue conversion and margin recovery rather than on the swap itself. H1 2026 revenue reached 3,268 billion VND, nearly double the prior-year period, but after-tax profit was only about 41 billion VND.

What to Watch

• Completion date and final allocation of the 51.4 million shares, including any revision to the 10,000 VND conversion price.
• HBC’s Q3 2026 earnings release for evidence that revenue growth is translating into profit and reducing accumulated losses.
• Further debt-to-equity conversions by SMC or other creditors, and any change in SMC’s ownership position in HBC.
• HBC’s liability-to-asset ratio and cash-flow statement in the next financial report, to confirm whether the swap materially eases liquidity pressure.
• Any regulatory or exchange disclosure on the one-year transfer restriction and its effect on creditor exit timing.