China Ocean Industry, the parent group of Jiangxi Shipbuilding, has entered into a debt restructuring agreement with Zhejian Ouhua Shipbuilding.
Under the agreement, China Ocean Industry will transfer 40% equity shares in its fully owned subsidiary China Ocean Hong Kong to Zhejian Ouhua Shipbuilding to offset outstanding debt of RMB200m ($30m) owed by Jiangxi Shipbuilding to Zhejiang Ouhua.
China Ocean Industry believes the deal will bring new cooperation opportunities to revive the business of Jiangxi Shipbuilding.
“Due to the downturn of the shipbuilding market in the PRC, Jiangxi Shipbuilding, which carries out the shipbuilding business of the group, has encountered difficulties in its business and operation in recent years and the group has been looking for opportunities to consolidate and reorganise the business of Jiangxi Shipbuilding. The disposal and the transactions under the debt restructuring agreement is part of the group’s effort to improve its financial position and reorganise its shipbuilding business,” China Ocean Industry said in a release.
In March, China Ocean Industry also entered into a strategic agreement with Yangzijiang Shipbuiling to collaborate on the future development of its subsidiary yard Jiangzhou Union Shipbuilding, where operations had been suspended due to financial difficulties.
Zhejiang Ouhua Shipbuilding itself has been suffering and filed for bankruptcy with a court in Zhoushan in May.