Chinese oil and gas equipment manufacturer Honghua Group has announced that the company’s potential deal with Jiangsu Honghai Energy Equipment to sell its entire offshore assets has been terminated due to financing difficulties for the buyer.
Honghua Group listed its entire offshore business for sale last year amid the uncertain outlook in the offshore market and planned to switch its business focus to the LNG sector.
Honghua listed the offshore assets for sale again for a nominal price of RMB1 due to the company’s negative net asset value. The buyer is required to acquire around RMB1.96bn ($285m) liabilities of the company’s offshore business as part of the deal.
Honghua hopes the sale of offshore business would help balance the short-term and long-term interest of the company and its sharehodlers and improve the group’s capital structure, resource allocation and financial performance.