AVIC International Holdings has entered into an agreement with China Merchants Offshore Engineering Investment to transfer its entire 69.77% equity interest in AVIC Weihai Shipyard and the shipyard’s shareholders loan to the latter for a total amount of RMB620m ($92m).
According to AVIC International, AVIC Weihai Shipyard continues to suffer losses and its equity interests of shareholders have become net liabilities as at the end of 2018, which has brought tremendous pressure on the operations of the group. It has also lost its external financing ability and has to rely on loans from shareholders to sustain itself.
The shipyard suffered a net loss of RMB471m in 2018 and net liabilities of the shipyard amount to RMB1.088bn.
China Merchants has been restructuring its shipyard assets, having integrated two ex-Sinotrans yards, Jinling Shipyard and Jiangdong Shipyard, into China Merchants Heavy Industry earlier this year. Last year, China Merchants also acquired Zhejiang Eastern Shipyard and integrated the yard into Yiu Lian Dockyard. It is now the fourth largest shipbuilding group in China following CSSC, CSIC, and Cosco Shipping Heavy Industry.
Sources close to the matter told Splash that AVIC International will sell another shipyard, AVIC Dingheng, to China Merchants soon, and quit the shipbuilding business.
Currently AVIC Weihai has eight passenger roro ships on its orderbook while AVIC Dingheng has 22 ships on order, all of which are small clean tankers.