Nowadays the thing I’m paying attention the most is the continuous existence and development of Sai Gon Paper Corporation (SGP). If the company couldn’t exist, all calculations would be meaningless.” This was the first speech that Mr Cao Tien Vi, founder of SGP, shared right after receiving the position of CEO of SGP, transfering the title of Chairman of Board of Directors to Mr Mai Huu Tin, the new investor who bought back all shares of Daio Paper at SGP.
The pleasant break-up
In 2011, when Daio Paper, the third biggest paper corporation in Japan, invested 33.81% shares in SGP, Mr Cao Tien Vi used a kind word “fellow” to talk about this strategic partner of his.
It’s possible to understand the feeling of Mr Vi at that time.
“At the time when Daio Paper decided to invest in SGP and Bridgehead Fund (belong to Development Bank of Japan) invested 14.49% was a great turning point for SGP. The company was facing with financial difficulty at that time, but the investors believed and committed to have long-term investments”, Mr Vi recalled.
Perhaps the dedication and sympathy to share difficulties of Daio Paper to SGP throughout the past had been the reason that Mr Vi still spent respectful sentiment to his partner until the last signatures were signed into legal documents to officially certify Daio Paper’s rejection of capital out of SGP.
Unlike other break-ups with unpleasant statuses that are often seen in M&A business transactions, with this break-up, according to Mr Vi, showed the satisfaction of all parties. Especially when Daio Paper fell into in-house crisis – an unforeseen scenario.
On September 2011, the gamble disreputableness of Mototaka Ikawa ex-president was disclosed. Right after that, on June 2012, Daio Paper was planned to buy back by its own competitor Hokuetsu Kishu Paper in a business transaction with the total value up to JPY 10 billion to own 20% shares in order to be Daio Paper’s biggest share holder.
Daio Paper’s complicated in-house problems affected severely to SGP’s operation. “We discussed with Daio Paper in late 2012 for solutions. We had to spend 6 months to have the way out. The parties decided to look for an alternative investor. Daio Paper knew that when rejecting capital they would take back their capital partly and preserve reputation. If they didn’t accept so, no-one would have any interest”, Mr Vi shared and thought, both parties have achieved objectives by this active project.
To SGP, the most important thing was to stop the standstill status. And to Daio Paper was to take back a part of their capital for preserving.
Of course, in fact, everything didn’t go simply like the story being told. Especially when Daio Paper was not a financial investor. This Group expected a long-term goal when deciding to invest in SGP.
Mr Vi told that Daio planned many beautiful and long-term projects in the marriage with SGP, when they saw a great potential in Vietnamese market with large sizes and demands but there were not many factories that produced consumer and industrial paper as SGP. In addition, SGP’s factory was also appropriate to Daio Paper’s orientation of producing paper products in Vietnam to export to Japan with lower costs.
"Those were good and long-term projects. However, we started doing while Japanese market fell into recession, Daio Paper itself fell into complicated in-house problems as well. What a pity! The reaction of Daio Paper in the role of a strategic investor in SGP’s activities at that time was just waiting”, Mr Vi was frank.
When Daio Paper changed their strategy to not continuously invest in SGP, SGP was about to stop working, got loss and staff were severely dispirited. Right at that time, Mr Vi recognized that he should turn back and receive the management role in early 2013.
The plans of reorganization and cut-off costs were implemented immediately. After 7 months (by July 2013), SGP had a satisfactory result with 21% of gross margin increase, profit before taxes increased about VN$ 60 billion.
Besides, Mr Vi decided to accredit Mr Denis Lafreniere to be the General Manager for managing and running SGP’s production. And the final but very important decision was to be unanimous to let Daio go.
“To Japanese, this is really a tough decision. Therefore, I spent quite a lot of time to convince them, luckily we had the consent”, Mr Vi shared.
The deep affection between the founder of SGP Mr Cao Tien Vi and the investor Mai Huu Tin helped to bring about a happy ending to SGP.
On August 2013, Mr Mai Huu Tin decided to invest in SGP to take back 33.81% shares from Daio Paper of Japan. Mr Tin and Mr Vi also decided to increse the owner capital of SGP to VN$ 1,000 billion, restructure the share holders’ structure and allocate roles of responsibilities for leader positions.
With the new structure, Mr Mai Huu Tin owns 42.3% (equal of VN$ 416 billion in registered capital). Mr Vi and two investment funds (Bridgehead and BVIM) and other share holders own 57.7% (equal of VN$ 570 billion in registered capital). The two biggest share holders of SGP are resonsible for management titles. Mr Mai Huu Tin holds the title of Chairman of the Board of Directors and Mr Vi is CEO.
“I and Mr Tin have been highly unanimous with these titles. I leave the highest position of SGP to directly join the management job. Everything can be changed, as long as SGP can exist and grow”, Mr Vi was frank with his new title in SGP.
Talking about the new Chairman of SGP, the founder of SGP expected of the new “fellow” of SGP and believed that Mr Tin understood clearly that investing in an industrial field needed to have a long-term vision from 10 to 15 years. “Mr Tin can see that prospect in SGP so he decided to invest”, Mr Vi asserted.
Mr Mai Huu Tin has been known as a profesional investor in many fields such as constructions, real estate development, retail distribution, agriculture, logistics, entertainment, etc and the founder and director of U&I Investment Corporation since 1998.
Till now, the future of SGP is still difficult. The consent of new investors, however, has opened a new prospect for the company and the initial security for its founders after quite a long time fighting for the existence of SGP.
In 2014, we will give priority for running totally the power of My Xuan 1 and 2 factories with the capacity of 48,360 tons of consumer paper and 224,640 tons of industrial paper. We will mobilize 20% of registered capital more (equal of VN$ 200 billion) and expect that 2015’s revenue will be VN$ 4,500 billion”, Mr Vi shared by his role of CEO.
According to Le Tan (baodautu.vn)
Translator: TM (Unigroup)