Shanghai: Rongsheng Heavy Industries have admitted that it has delayed payments to suppliers and workers through an official announcement today, in response to a worker protest in its shipyard earlier this week.
“Demand in the global shipbuilding market has continued to decline and prices for new vessels have failed to rebound. Throughout the shipbuilding industry, banks and other financial institutions have tightened credit facilities available to shipbuilders, and many shipowners have delayed, renegotiated or defaulted on payments to shipbuilders. These factors have caused higher pressure on the group’s working capital in recent months, and the group has tightened cash outflow by delaying its payment to its suppliers and workers,” Rongsheng said in the release.
Rongsheng said it is currently in discussions with a number of banks and financial instituations for renewing exisiting credit facilities while it is also actively seeking financial support from the government and the substantial shareholders of the company.
It has entered an agreement with a company controlled by Zhang Zhirong, a major shareholder and the former chairman of the company on July 3, to secure an interest-free and security-free loan of RMB200m to finance its working capital. [05/07/13]
