Rongsheng Heavy Industries mulls restructuring to improve finances
Shipbuilder seeks asset valuation as first step towards improving finances
Embattled shipbuilder China Rongsheng Heavy Industries said it had appointed an independent valuer to assess the assets held at its main production base in Jiangsu province, in a step towards the potential restructuring of the mainland's biggest privately owned shipbuilder.
Rongsheng said in a Hong Kong stock market filing on Monday evening that the asset appraisal would form the basis for a potential restructuring at its main shipyard in Rugao City, Jiangsu, and the process would be completed by the end of June 2015.
"The objectives of the potential restructuring are to improve the overall financial position of the group," a company statement said. The statement added that the firm will ask the government for assistance in starting talks "with independent third parties on the investment and restructuring" of the firm.
Trading in Rongsheng has been suspended since August 29. The firm said it will remain suspended until further notice to ensure "fair disclosure" of any decision by the company.
Rongsheng has been struggling over the last two years as the shipping industry slumped due to sharp falls in freight rates and a glut in vessels. Rongsheng also had a record of frequently delaying projects such as the construction of Valemax ships, the giant iron ore carriers ordered by Brazilian miner Vale.
Mainland media reported in late August that Rongsheng was in talks to be taken over by Shanghai Waigaoqiao Shipbuilding (SWS), a subsidiary of state-owned China State Shipbuilding Corp. Both companies declined to comment on the reports. An SWS executive, who asked not to be named, told the that the matter was in the hands of the provincial Jiangsu government.
As of the end of June, Rongsheng's total asset-to-equity ratio stood at 1,156 per cent. It reported three billion yuan (HK$3.78 billion) in first-half net losses, more than double that from the year earlier period.
