Singapore: The yard most widely tipped to take over financially troubled China Huarong Energy, formerly known as Rongsheng Heavy Industries, should make its decision by the end of June. Ren Yuanlin, chairman of Yangzijiang Shipbuilding, China’s number one yard by orderbook size, said at a results briefing today: “The government, banks, and Rongsheng’s major shareholder all hope we can be part of the deal, but whether or not we will get in depends on the asset price.”
Ren, who has a 26% stake in Yanzijiang, added: “We are not interested in anyone else but Rongsheng.”
In its first quarter statement, Singapore-listed Yangzijiang noted: “The Chinese shipbuilding industry as a whole still faces an overcapacity issue; utilisation rate for the industry has decreased from 75% in 2010 to 60% in 2015, substantially lower than the global average and the optimal level for the industry. Chinese government has indicated strong determination to promote industry consolidation, and established shipyards with strong overall capabilities will benefit from the process.”
Yangzijiang’s first quarter net profit dropped 12% year-on-year to RMB707m ($114m).
Rongsheng, weighed down by billions of dollars of debts, will have a new shareholding, Splash understands.
According to an industry source, Yangzijiang will acquire 20% equity in the financially troubled shipyard, three banks coordinated by the Jiangsu government, namely Minsheng Bank, China Everbright Bank and China Development Bank, will together acquire 40% equity, Rongsheng’s founder Zhang Zhirong and some major shareholders of the yard will occupy 20% equity, and the remaining shares will be taken by smaller investors.