KUALA LUMPUR: Parkson Retail Asia Ltd’s (PRA) indirect wholly-owned subsidiary, Parkson Vietnam Co Ltd, has filed a court application in Ho Chi Minh City, Vietnam for the commencement of voluntary bankruptcy proceedings.
PRA is a 67.96%-owned subsidiary of Parkson Holdings Bhd
.
Parkson Holdings said Parkson Vietnam has historically been operating at a loss, "with such losses being compounded in recent years due to the challenging business environment as a result of the Covid-19 pandemic.”
"In particular, the lack of support from Parkson Vietnam’s landlord, such as the negligible rental rebate or rental reduction during the pandemic lockdown when the operation of Parkson Vietnam’s stores was restricted, had adversely impacted its financials.
"The high land tax imposed by the local government had also added to Parkson Vietnam’s financial difficulties,” the group said in a stock exchange filing with Bursa Malaysia.
As such, the group said it has assessed and determined that it is not commercially feasible to continue its operations in Vietnam and has determined that it will be in the best interests of Parkson Vietnam to file the application.
This is in line with the group’s focus on its operations in Malaysia, where it remained optimistic about the overall market prospects, it said.
The bankruptcy application is, however, subject to approval from the relevant authorities in Vietnam, it noted.
The group said "PRA will only be able to determine the exact financial impact of the voluntary bankruptcy of Parkson Vietnam on the consolidated net tangible assets per share and earnings per share of the PRA Group for the current financial year ending Dec 31, 2023 upon the grant of the application.”
Under Vietnam law, it noted that "the liabilities of Parkson Vietnam shall remain with and be limited to Parkson Vietnam and do not extend to the company, its other subsidiaries, or its holding companies.”
"The group's maximum potential exposure resulting from the voluntary bankruptcy of Parkson Vietnam will therefore be limited to its capital contribution to Parkson Vietnam.
"Notwithstanding the foregoing, PRA had recognised full impairment loss on its capital contribution in Parkson Vietnam in its audited financial statements,” it said. - Bernama
