Novaland plans to lend over VND 2,000B to subsidiaries, funded by rights issue

Overview

Novaland (NVL) announced a board resolution to lend up to VND 2,053.6 billion to two subsidiaries, Nova Saigon Royal and No Va Thao Dien, for repaying overdue debts and financial obligations. The funding will come from a previously announced rights offering of nearly 800.7 million shares at VND 10,000 each, targeting gross proceeds of VND 8,007 billion. The plan highlights the developer’s continued reliance on equity capital to address its substantial debt burden.

Key Facts

• Novaland will lend up to VND 916.3 billion to Nova Saigon Royal and up to VND 1,137.3 billion to No Va Thao Dien.
• Loan terms are up to 36 months from disbursement, with interest not exceeding 14% per annum.
• Disbursement is expected in Q4 2026 to Q1 2027.
• The rights offering has a 3:1 ratio (3 rights to buy 1 new share) at VND 10,000 per share, expected to raise VND 8,007 billion.
• The offering is planned for Q3 or Q4 2026, pending State Securities Commission approval.
• Novaland’s parent company had total borrowings of VND 31,166.7 billion as of March 31, 2026, with VND 18,083.6 billion in short-term debt.
• The largest bond creditor is UBS AG, Singapore Branch, with outstanding debt of VND 7,927.2 billion from a USD 300 million convertible bond.

What Happened

Novaland’s board of directors approved a plan to lend a combined VND 2,053.6 billion to two wholly-owned subsidiaries: Nova Saigon Royal (VND 916.3 billion) and No Va Thao Dien (VND 1,137.3 billion). The loans carry a maximum 36-month tenor and an interest rate cap of 14% per year. The subsidiaries will use the funds to settle overdue debts, financial obligations, and payables.

The lending capital will come from Novaland’s rights offering of nearly 800.7 million shares to existing shareholders at VND 10,000 per share, which is expected to raise approximately VND 8,007 billion. The offering, with a 3:1 subscription ratio, is slated for Q3 or Q4 2026, subject to regulatory approval from the State Securities Commission. The remaining proceeds, about VND 5,953.3 billion, will be used to repay the parent company’s own overdue debts.

Market Context

Novaland shares closed at VND 12,650 on July 19, 2026, on the HOSE. The stock has been under pressure as the company grapples with high leverage and a slow property market recovery. As of March 31, 2026, the parent company’s total borrowings stood at VND 31,166.7 billion, with short-term debt of VND 18,083.6 billion, largely from bonds (VND 9,412.6 billion) and third-party loans (VND 8,046.1 billion). The rights offering and intercompany lending plan are part of a broader effort to manage liquidity and restructure liabilities.

Strategic Significance

The decision to channel a significant portion of the rights offering proceeds to subsidiaries for debt repayment indicates that Novaland’s liquidity challenges extend beyond the parent company to its project-level entities. By using equity capital to pay down overdue obligations, the company is reducing default risk but also diluting existing shareholders. The high interest rate on the intercompany loans (up to 14%) suggests the subsidiaries face elevated credit risk. The plan also underscores the importance of the rights offering’s success; if it fails or is delayed, Novaland may need alternative funding sources.

What to Watch

• Approval timeline from the State Securities Commission for the rights offering.
• Subscription rate and investor appetite for the rights issue, given the dilutive impact.
• Q2 2026 financial results to assess changes in debt levels and cash flow.
• Any further restructuring or asset sales to address the VND 7.9 trillion UBS bond obligation.
• Market reaction to the intercompany loan terms and the subsidiaries’ ability to repay.