Guangzhou Shipbuilding Swoops on Parent’s Unit

Guangzhou Shipbuilding International (GSI) has revealed plans to acquire its sister company CSSC Huangpu Wenchong Shipbuilding Company, and related shipbuilding assets held by Yangzhou Kejin.

Huangpu Wenchong is CSSC’s primary base for defense ships, special engineering vessels and ocean engineering equipment in southern China, as well as the manufacturing hub for dredging engineering vessels and feeder container ships.

According to the restructuring proposal, GSI will purchase the entire issued share capital of Huangpu Wenchong at a consideration of RMB 4.527 billion (USD 741m), 85% of which will be paid by means of share issuance, and 15% by means of cash payment. In addition, GSI plans to purchase shipbuilding assets owned by Yangzhou Kejin at a consideration of RMB 968 million (USD 158.2m) by means of share issue.

GSI has also proposed a non-public issue of a maximum of 111. 2 million of new Shanghai-listed shares for a maximum of RMB 1.831 billion (USD 299m) to finance the Huangpu Wenchong purchase, and expand its marine-engineering equipment manufacturing facilities. CSSC, the parent company of GSI, will see its shareholding in GSI rise to 57.25% upon completion of the restructuring plan.

Management of GSI said, “CSSC’s solid support makes it possible for GSI to continuously consolidate industry resources through strategic M&A actions. We are committed to fully leveraging on China’s new policy for military industry assets securitization, and raising our defense and ocean engineering equipment capabilities. We believe the across-the-board development in defense, civil and ocean engineering segments will build a solid foundation for strengthening our competitiveness and profit-making capacities.”

As the only overseas capital operations platform of China State Shipbuilding Corporation (CSSC), GSI will become the first military industry-related company with dual-listing status in Hong Kong and Shanghai. Trading of GSI shares will resume on November 3rd on Hong Kong and Shanghai Stock Exchange.

Press Release