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Sá xị Chương Dương's management said five years of losses and negative equity have left the company with insufficient funds to sustain operations through the end of the year. The company aims for revenue of about 228 billion dong this year, about 1.5 times last year, but still posted a loss of 74 billion. 'With negative equity and a severely shrinking operating cash flow due to ongoing losses, management believes the company won't have enough cash to maintain operations through year-end,' said Tan Teck Chuan Lester, Chairman of the Board, in annual meeting materials. According to management, the domestic soft drink market grows by about 5-6% per year. Healthier options with reduced or no sugar are the most advantaged product lines due to changing consumer tastes. However, the company currently lacks the capacity to develop these lines. The leadership notes that the Middle East conflict is raising input costs, including raw materials and logistics. Consequently, gross margins in the beverages segment continue to be eroded. In addition, limited cash flow could hamper debt servicing, potentially increasing financing costs vs prior years. To address the cash shortfall, Sá xị Chương Dương proposed transferring the Nhơn Trạch 3 factory and related assets (including the Saxi brand) to F&N Ventures for 93 billion dong. F&N Ventures is a subsidiary of F&N, a member of the Thai Beverage ecosystem founded by Thai billionaire Charoen Sirivadhanabhakdi, which is listed on the Singapore Exchange. At an extraordinary meeting two months ago, the transfer plan was approved, but shareholders did not accept F&N Ventures' bid of at least 75 billion dong. The board had previously said losses totaling 350 billion dong over five years forced timely decisions to improve financial capability and cash flow autonomy. The company set conditions for the buyer, including immediate payment of 35% of the transfer price upon signing to keep the company afloat and avoid risk of insolvency. Management also stated that after transferring the beverages business, Sá xị Chương Dương could become a real estate company, continuing to operate existing properties in central Ho Chi Minh City and nearby Binh Duong (former) and seeking additional opportunities in the future. The financial outlook was expected to brighten thanks to this segment. In the first quarter, Sá xị Chương Dương earned 63 billion dong and posted a loss of nearly 11 billion, an improvement over the same period last year. Total assets were about 622 billion dong, while liabilities reached 790 billion dong and equity remained negative at 168 billion.
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