Huarong Energy, formerly Rongsheng Heavy Industries, has officially entered into an agreement with Unique Orient for the disposal of its shipbuilding assets.
Unique Orient is an investment holding company and the ultimate beneficial owner the company is Wang Mingqing, who is the holder of a HK$102m ($13m) convertible bond of Huarong Energy.
The assets in the transaction including 98.5% equity interest of Rongsheng Heavy Industries, the entire interest in Rongsheng Engineering Machinery, Rongsheng Power Machinery and Rongsheng Marine Engineering Petroleum Services, were sold for a nominal price of HK$1.
According to Huarong Energy, the total unaudited consolidated liabilities of Rongsheng is approximately RMB22bn ($3.18bn).
“Given the board is of the view that there are limited growth opportunities and future profitability of the shipbuilding and engineering business, and a turnaround of the business is unlikely in the foreseeable future, it is in the best interest of the company and the shareholders as a whole to dispose of the business and focus the group’s resources towards the energy business,” Huarong Energy said in a release.
Huarong Energy expects the deal to be completed before end of this year.
Once the largest private shipyard in China, Rongsheng ceased shipbuilding operations in 2014 after it was hit by a major financial crisis and the shipyard rebranded into Huarong Energy in 2015.