About us

MATTER: 

Restructuring to improve performance and increase asset value (2020)

CLIENT:

A Vietnam-based subsidiary of a Malaysian FMCG company

BACKGROUND:

The Client is a leading FDI Company in FMCG business. After 26 years operating in Vietnam, the Client established its strong position in distribution, manufacturing and logistic businesses with significant revenues in all 3 areas.

In 2020, the Client appointed ATIM to provide them advice and support to improve the company’s performance and efficiency.

CHALLENGES AND SOLLUTIONS:

Although the Client generated significant revenues but the net profit after tax over sales ratio and return on equity was very low (much lower than the industry average). The owner and his family directly owned 100% shares in 3 related companies and invested a high amount of money in the 3 companies in form of equity and shareholder loans. The owner also used his family’s properties to pledge to the sole bank for the secured working capital loan with that bank. The subsidiary which managed the logistic business was making a loss due to low utilization of the warehouse and high operation costs. Almost 50% of interest expenses were not tax deductible due to high related parties’ transactions, resulting in much higher tax cost. The owner did not have surplus funds for many other good investment opportunities.

How did ATIM assist the Client in restructuring and creating shareholder value?

• ATIM restructured the whole group, setting up a holding company to eliminate the direct involvement of individual shareholders in the 3 companies to protect privacy and lower tax cost, creating a new logistic company to eliminate related parties’ transactions for increased tax-deductible interest expenses for the Client.
• ATIM assisted in re-branding the group as a growing regional group by consolidating the offshore businesses of Client Family in China and Singapore in Client’s business portfolio. ATIM conducted the roadshow for the new company and negotiated terms and conditions for clean credit facilities with a regional bank and a local bank. ATIM managed to triple the working capital lines while lowering interest rate by over 30% for the Client. Thanks to those, the 3 subsidiaries can repay the shareholder loans to the owner, providing him with surplus funds to invest in other high-returned assets.
• ATIM advised Client to sell the warehouse which had been under-utilized. ATIM was involved in the whole M&A process and successfully closed the deal with good price in 6 months.
• ATIM also identified the opportunities for the Client to leverage its strong relationships with hundreds of distributors for developing digital supply chain, further enhancing the return for the group. ATIM successfully led the pilot supply chain financing deals with a distributor, which proved high earning for the program.
• For controlling the whole group, ATIM assisted in developing the internal control system, improving the business management processes, reducing business risks and increasing business efficiency. 

RESULTS

• Client’s 3 subsidiaries all increased net operating profit after tax by over 30%.
• Thanks to streamlined logistic activities, the Client can also cut down logistic cost by over 35%.
• With an improved internal control system, Client’s BOD and management can identify risks and apply suitable measures to mitigate risks and increase business efficiency in a timely manner.
• The owner saved dividend tax by 5% p.a and would continue to benefit from that in the long run. In the meantime, by investing in high-return assets, the owner can create values for him and his family in both short and the long term (some assets can generate 20%- 25% p.a return). He and his family are very happy as for the past 26 years, they have ever had such surplus funds for such good investment opportunities.
• The client became more attractive in the eyes of lenders and investors. While the lenders lower interest rate for the Client, 3 investors also sent very good offers for acquiring shares in the Client.