China Ocean Industry has announced that a court in Jiangsu has ruled to liquidate its subsidiary yard, Huakai Heavy Industry, at the request of creditors due to the yard’s inability to repay debts.
The ruling has frustrated China Ocean Industry’s plan to sell its stake in Huakai Heavy Industry. In June, China Ocean Industry entered into an agreement with Nantong Huachuan Transport Equipment to sell a 60% equity interest in Huakai for RMB20m ($2.89m).
The asset value of Huakai Heavy has shrunk substantially in the past three years since China Ocean Industry took over full equity of Huakai Heavy Industry in November 2016 for a price of RMB270m ($39.3m).
China Ocean Industry said it is actively talking with creditors, the local government and the court to seek a resolution.
In May, China Ocean Industry was forced to transfer its entire 24% equity interest in Nantong Xiangyu Ocean Equipment to creditors due to debt issues. It also transferred the management of another subsidiary yard Jiangzhou Union Shipbuilding to Yangzijiang Shipbuilding through a joint venture agreement signed last year.