China Shipbuilding Selling Shares to Raise USD 586 Mn
- Business & Finance
In an effort to reduce its debt, China Shipbuilding Industry Co. has revealed plans to raise some CNY 3.9 billion (USD 586.7 million) through the sale of 718 million of its shares, Bloomberg cited data from the company’s stock exchange filing.
The shares would be sold at a price of CNY 5.43 each to the shipbuilder’s parent company, China Shipbuilding Industry Corporation (CSIC), and two wholly owned units of the group.
With this move, the parent company would support China Shipbuilding with an amount of CNY 3.16 billion, thereby increasing its stake in the firm from 52.7 percent to 54.5 percent.
Due to a sluggish shipbuilding industry the company’s debt as of March 31 stood at CNY 130.7 billion (USD 19.6 billion).
China Shipbuilding added that the plan still needs to gain approval of regulators and shareholders.
According to data released by China’s Ministry of Industry and Information Technology, during the first quarter of 2016 Chinese shipyards recorded an increase in newbuilding orders.
From January to March of 2016, the country’s newbuilding orders jumped by 23,9 percent to 7.42 million dwt, compared to the same period a year earlier, while the shipyards constructed 8.35 million dwt in vessel tonnage during the first quarter, down by 11.8 percent.
The Chinese orderbook backlog decreased by 17 percent, as it stood at 120.35 million dwt by the end of March.
IHS Maritime & Trade earlier said that the shipbuilding industry has entered one of the toughest years in recent history.
Namely, major shipbuilding nations will be put to the test during 2016, as competition is expected to intensify as a consequence of diversification in other sectors.
Chinese yards seem to be destined to enter the technically complex areas of cruise vessels and liquefied natural gas (LNG) tankers, according to IHS Maritime & Trade.
World Maritime News Staff