On 12/5, hundreds of investors at the FLC Ha Long project gathered at FLC’s headquarters in Cau Giay district, Hanoi to ask this corporation to pay profits according to the signed contract.
According to many investors, for nearly 1 year, hundreds of investors at the FLC Ha Long project have been extremely frustrated by the delay of FLC Group to in paying profits in accordance with the signed contract.
FLC Ha Long project is a hotel and villa complex the construction of which started in 2016 and put into operation at the end of 2018. The investment of its 5-star hotel buildings with more than 600 apartments are contributed by investors. At the time of handover the houses is also the time the two sides signed a satisfactory contract in the form of condotel. Accordingly, FLC will lease all apartments of investors who contribute capital for the hotel.
Under this contract, FLC commits to pay 12% of total investor capital every year. The group also pledges to pay in two installments on June 30 and December 31 each. Also according to the terms of this contract, if FLC is late in payment, it must pay 150% interest rate of savings deposit at the bank.
Although the contract has been signed, investors said that in fact, the first term profit payment (first 6 months of 2019) has been delayed by FLC Ha Long for many months.
Specifically, until the end of August 2019, FLC Ha Long has not yet paid profits. From mid-September, FLC Ha Long has paid but was in small tranches. According to investors, the first installment payment was in principle required to be made on June 30, 2019 but it was made at the end of December and they ignored payment of about 150% of the bank interest due to late payment. In the second phase, in principle, the payment was due on December 31, 2019 but until now, FLC has not yet made.
It is worth noting that although delaying the payments, FLC did not make any apologies, notices or negotiations with investors. As a result, hundreds of investors had to gather at FLC’s headquarters, hunging banners to demand the corporation’s leadership to negotiate and pay profits.
According to VietnamFinance’s research, related to FLC Ha Long project, in February 2020, FLC issued a notice on the suspension of payment of profits according to the content previously committed due to the impact of the COVID- 19.
Accordingly, this company decided to temporarily stop paying committed profits to customers in some resort projects including: The Coastal Hill Quy Nhon, Condotel Quang Binh, and Condotel Ha Long (first year). The company said it would announce a specific deadline for profit payment as soon as the World Health Organization announced the end of the Covid-19 pandemic, when FLC businesses returned to normal operation.
However, investors believe that FLC’s use of the reason of the disease to delay payment of second-round profits in 2019 is unconvincing, because the business in the last 6 months of 2019 of this group was complete and had not been affected by COVID-19, even “doing very well.”
“FLC explained that the Covid-19 epidemic affected the revenue so it was unable to pay us profits. However, this group has money to have just started the 72-story tower in Hai Phong with a total of investing more than VND3,472 billion ($147.74 million) so its denial is totally unacceptable,” an investor at FLC Ha Long project told VietnamFinance.
It is known that the price of apartments in FLC Ha Long is from VND52.3 million to VND60 million per square metter (much higher than the price of luxury apartments in Hanoi).
This is not the first time FLC has been besieged during a period of the country battling the COVID-19 pandemic. On the morning of April 18, dozens of buyers of apartments at the FLC Sea Tower Quy Nhon project surrounded the project area of Nguyen Van Cu ward, Quy Nhon city, Binh Dinh, demanding the firm to hand over apartments to them after one-year delay.
Mr. T.H.N. (a customer who buys an apartment at the FLC Sea Tower Quy Nhon project) said that on October 5, 2017, he signed a contract with the seller representative, Mr. Nguyen Thien Phu – deputy director of FLC Faros Construction Joint Stock Company – to buy an apartment at the Quy Nhon FLC Sea Tower project with an area of 45.4m2 at VND1.43 billion.
According to Mr. N., the contract states: “The seller is scheduled to hand over the apartment to the buyer in the fourth quarter of 2018. The parties agree that the time to hand over the apartment may be extended up to 2 times but each time does not last longer than 45 days from the last day of the expected time of handover.”
“According to the contract, the firm should hand over their apartments to us by the end of March 2019 as the latest deadline. In fact, they did not until now. Practically, the delay was more than one year. It makes us concerned as the project has not been completed,” Mr. N said.
FLC Sea Tower Quy Nhon Project (5-star hotel and residential complex in the form of a hotel apartment with commercial and service facilities) was assigned and leased land to FLC Faros by Binh Dinh province’s People’s Committee on Nov 17, 2016. The land area of 17,426.4 m2 belongs to the planning area of 655 Regiment of transport, Nguyen Van Cu ward, Quy Nhon city. The lease term is 50 years from the date of signing the decision.
The COVID-19 pandemic seems to have pushed FLC Group into a crisis when recently the airline belonging to FLC Group, Bamboo Airways, was reported to have huge debts.
On May 7, the press reported that in recent times, Vietnam Airport Corporation (ACV), Flight Management Corporation (VATM), Saigon Ground Joint Stock Company (SAGS) and Cong Ground Floor Joint Stock Company (HGS) … have sent many debt closing documents to Tre Viet Aviation Joint Stock Company (Bamboo Airways) to demand it to pay its liabilities.
The creditors have also submitted their reports to the Ministry of Transport on the debts that Bamboo Airways has to pay them for 2019 and the first months of 2020.
Specifically, ACV has sent a written request to the Ministry of Transport and the Vietnam Aviation Administration of Bamboo Airways’ late payment of service fees and a debt of VND205 billion.
According to ACV, the performance of the contract on terms of payment, Bamboo Airways often did not pay on time in accordance with the provisions of the signed contract.
The airlines of billionaire Trinh Van Quyet often delayed its payment with an average of about 42 days compared to the payment period specified in the signed contract. By the end of March 18, Bamboo Airways owes ACV more than VND205 billion.
Among them, the total amount of overdue debt is more than VND178.7 billion, including VND 107.3 billion of passenger service charges, passenger security screening, luggage that Bamboo Airways has collected on behalf of ACV.
The remaining amount is VND 71.3 billion for ground services and port services provided directly by Bamboo Airways to ACV. In addition to the above, Bamboo Airways has VND 25.7 billion of undue debt and VND 4.5 billion overdue interest under the contract between the two parties.
Mr. Trinh Van Quyet, former Chairman of FLC Faros Construction Joint Stock Company (ROS) in less than a month after resigning from the chairman post of the Board of Directors, he has divested two times in ROS for the first time selling 53.8 million shares but still the largest shareholder. In the second withdraw, he sold 5 million shares and reduced his ownership 40.95%.
At the annual meeting in early May, many shareholders questioned FLC Faros management about Mr. Quyet’s decision to resign and divest. However, the representative of this business said that these decisions were individual based on financial needs, so they could not intervene. The resignation may be due to the need to focus time for two other companies, FLC Group and Bamboo Airways.
After Mr. Quyet left the company, ROS shares plummeted from VND 4,100 to VND 3,500 a share.
Mr. Trinh Van Quyet’s FLC has been involved in many scandals in recent years. The trial on September 30, 2019, at the People’s Court of Cau Giay district on a lawsuit between FLC Group Joint Stock Company (FLC Group) and Vietnam Education Electronic Newspaper related to the article “Enterprises accusing FLC of indecision, the debt of hundreds of billion dong” have been widely concerned and today, May 15 has just taken place the appellate hearing.
As one of the groups that are considered by many to grow very fast, besides the doubts about the “miraculous” development process with projects on key areas across the land across the country, FLC also encounters constant fuss surrounding the guarantee of the interests of customers, investors, and partners.
But due to many incidents of FLC in recent years, the public has to ask whether this business will survive or it is too last to collapse because its collapse will surely affect many other institutions in Vietnam.