Coteccons Under Push for Extraordinary General Shareholders’ Meeting

In its statement to media, Kustocem Pte., a Singapore-based company and a long term shareholder of Coteccons, holding 17.55% of outstanding shares, is pushing for an independent forensic audit of the company’s contracts amid claims the business is riven by conflicts of interest.

Kustocem Pte., an arm of the Singapore-based Kusto Group Pte., said the governance and management concerning the conflict of interests among the companies within Coteccons Group by Coteccons’ executive management team have caused significant damages to their investment through reduction in Coteccons share prices and serious violation of our shareholders’ rights.

Kusto submitted a document to the Vietnam Securities Depository Center on Monday for a complete list of the company’s shareholders. It has also made relevant disclosures to the State Securities Commission and Ho Chi Minh Stock Exchange, seeking support to run the meeting without the cooperation of Coteccons executives.

The investor said Coteccons’ Board of Directors failed to organise the meeting as requested within the required deadline. This action comes after several years of unsuccessful attempts by Kusto in dialogue with Coteccons to resolve the issues internally.

It is rare to see an activist investing campaign in Vietnam, where the foreign ownership limit on public companies stop foreign investors from taking full control. Coteccons’ share price has dropped by 35% over the past year, four times the decline in the benchmark index, amid falling profits and sales, according to Bloomberg data.

Kusto expresses its no confidence on the current Board of Directors and Board of Management, especially various executive members including Chairman Nguyen Ba Duong CEO Nguyen Sy Cong and vice CEO Tran Quang Quan, demanding their immediate resignations from all positions in Coteccons. 

“This is not a conflict between groups of shareholders. This is a conflict between all Coteccons shareholders and the current executive management team that does not act in the best interest of Coteccons. Having the current management team in charge poses existential risks to Coteccons and could potentially destroy all Coteccons’ shareholders value,” said Kusto.

“We respectfully and urgently request relevant Vietnamese governmental authorities to take necessary actions to protect shareholders rights and Vietnam’s investment environment.”

Coteccons fell 7% Tuesday to VND71,900 in Ho Chi Minh City, for a market value of VND5.72 trillion ($250 million).

Kusto Group has been a long-term institutional investor in Vietnam for over 10 years with many investments totalling over $100 million while Coteccons is Vietnam’s largest listed construction company with 2019 revenue of over VND23.7 trillion.