The Situation

Acquire the real estate assets outside of an industrial zone from an insolvent Korean-owned Chinese company headed by stressed foreign management to expand garment manufacturing capacity on a fast track schedule

  • Hanesbrands, Inc. is a socially responsible manufacturer and marketer of leading everyday basic apparel under some of the world’s strongest apparel brands in the Americas, Europe and Asia, as well as in Australia and South Africa.
  • Hanesbrands has been successfully manufacturing garments in Vietnam at 2 plants in north and central Vietnam since 2007.
  • Since Vietnam was one of its most productive and cost effective manufacturing locations, management decided to expand its manufacturing capacity in North Vietnam.
  • The optimal location for the capacity expansion was an existing garment plant located a few miles up the road from Hanesbrands’ current facilities, not in an established industrial zone, and owned by a Korean investor in financial distress.
  • Tractus was tasked with negotiating with the Korean owners of the facility and structuring the asset acquisition process to maintain Hanesbrands’ fast track facility expansion schedule.

The Project

Using our in-depth understanding of Vietnam’s investment approvals and land usage rights acquisition process, we researched the status of the assets, documented the most efficient acquisition process and developed relationships with almost one dozen stakeholders and managed the execution of the acquisition plan on schedule

  • Tractus was initially tasked with legal and commercial due diligence on the property’s owner. Land documentation was studied to ensure that preferred site was legally zoned and titled.
  • Tractus also conducted due diligence on the seller to verify their ownership title and all potential financial liabilities related to the land and assets attached to it, which might have impacted the acquisition timeline and Vietnamese government approvals.
  • Tractus led a four-party negotiation involving the buyer, the seller, the seller’s creditors and the local government responsible for approving the acquisition of the land usage rights.
  • We negotiated a discount to the original asking price with the owner and, in coordination with Hanesbrands’ legal team, drafted contractual terms for the acquisition of the land usage rights to minimize the risk for all parties.
  • Once the acquisition agreement was signed, Tractus managed the implementation process and worked with our client’s designated project team, their internal and external counsel, the seller and various government agencies to expedite the necessary approvals and implementation process required for Hanesbrands to take possession of the property on schedule.
  • Since the plot of land was not in an industrial zone, 8 different government agencies were involved in the land usage rights acquisition process: the provincial People’s Committee, Department of Investment and Planning, Department of Construction, Department of Natural Resources and Environment, Department of Finance, provincial Tax office, People’s Committee at the commune level and the Department of Natural Resource and Environment, which needed to be coordinated with Hanesbrands, the seller and the seller’s creditors.

The Solution

Land usage rights were acquired at a >23% discount to the original asking price resulting in a savings of US$1,400,000 on the acquisition cost and the property and all required legal documentation were completed for an on-time handover to the construction project management team

  • We successfully negotiated a >23% discount from the original asking price resulting in a savings of US$1,400,000
  • All legal documents including business licenses, construction permit and the land use rights certificate were obtained on-schedule