Chinese oil and gas equipment manufacturer Honghua Group has announced that Shanghai Shangshi International Trade Group has commenced legal proceedings against the company due to a debt dispute.
Honghua Offshore, the offshore yard of Honghua Group, signed purchase agency contract with Shangshi International Trade in 2015 to procure materials for a major shipbuilding contract of building 200 LNG-powered inland river ships for LNG Power Shipping. Shangshi International Trade claims Honghua Offshore has owed around RMB320.7m ($48m) for the material and equipment procurement costs, agency fee and relevant interests.
According to Honghua, it failed to pay Shangshi International Trade due to the shipbuilding project being delayed as LNG Power Shipping hasn’t been able to pay as expected.
Honghua has sought legal advice on the litigation proceeding and will take all appropriate steps to defend.
In October last year, Honghua Group announced its intention to dispose of its entire offshore business segment amid the uncertain outlook in the offshore market. The potential sale hasn’t made any progress yet.