China Rongsheng Sinks Further

Shipbuilder China Rongsheng Heavy Industries Group Holdings reported a negative revenue of RMB 3.8 billion (USD 618 million) in 2014, due to fewer shipbuilding and other contracts, and the reversal of revenue from cancellation of 29 shipbuilding contracts.

Losses attributable to the equity holders of the company were RMB 7.8 bn, compared to RMB 8.7 bn loss recorded in 2013.

Revenue from shipbuilding and other contracts was RMB 728.4 million as compared to RMB 1.34 bn in 2013, representing a year-on-year decrease of approximately 45.8%.

Revenue reversed from the cancellation of the shipbuilding contacts was RMB 4.53 billion.

China Rongsheng’s current liabilities exceed its current assets by approximately RMB 20.7 bn. The total borrowings and finance lease liabilities of the group at the end of were RMB 22.6 bn, of which RMB 20.8 bn is due within 2015.

Given the current situation, the group is considering a potential sale and purchase of the core assets and liabilities of its onshore shipbuilding and offshore engineering business in China.

On March 10, China Rongsheng signed a Memorandum of Understanding with an undisclosed third party for this potential transaction, which the group believes will adjust and optimise its assets and business.

Through divesting the relevant assets and liabilities of the shipbuilding business and offshore engineering business, the group expects to ease the debt burden, and better implement the strategy of transformation into an energy service provider focusing in the oil and natural gas market.