Hong Kong-listed Titan Petrochemcials has suspended financial support for subsidiary yard Jiangsu Hongqiang Heavy Industry, only three months after it took over the shipyard.
Titan acquired Hongqiang Heavy for HK$21m ($2.7m) in October 2017 and invested another RMB70m to support the shipbuilding operations of the yard.
Hongqiang Heavy currently has on hand orders of six handy bulkers from Bulgarian owner Navibulgar. Sources told Splash that so far two of the six vessels have been completed while the third one is under construction, and Titan has stopped financial support for the construction of the fourth vessel.
Operations of Hongqiang Heavy have been suspended since a strike by yard employees at the end of January over unpaid salaries.
The local government has sent a letter to Titan, seen by Splash, asking the company to solve the salary issue before the Chinese New Year but as yet it hasn’t received any feedback from Titan.
Following the completion of a long restructuring process, Titan Petrochemicals has just started to develop its business from early 2017 with a focus on the shipbuilding and ship repair market. In addition to the takeover of Hongqiang, it acquired Zhoushan Yatai Shipbuilding Engineering and also entered into a MOU with Singapore’s RMS Energy to fund the construction of a yard in Singapore.
In September 2017, the High Court of Hong Kong ordered the winding up of Titan’s controlling shareholder, Guangdong Zhenrong Energy, at the request of creditor Industrial Bank. Titan said the issue may have a material adverse impact on the company’s business operations and financial position.