The on-off potential merger of two of China’s largest shipbuilders looks to have hit problems. Singapore-listed Yangzijiang Shipbuilding has been linked with taking over the operations of the yard formerly known as Rongsheng Heavy Industries, one of the biggest casualties from the shipyard downturn.
Now however Yangzijiang senior management have said they will only come in for Rongsheng once its debt picture is more clear.
“We will not step in until the debt issues have a clear resolution. Only after Rongsheng and its creditor banks reach a debt-to-equity swap will we lend support in operational and managerial matters. Capital investment from us is off the table,” executive chairman Ren Yuanlin said at the company’s second-quarter results briefing.
Rongsheng is suffering from debts to the tune of billions of dollars.
“Rongsheng was seeking a reverse takeover by a company listed in Shanghai and a debt-to-equity swap with creditor banks. But due to unfavourable market conditions since June, the plan hasn’t been able to get through,” Yangzijiang’s Ren said.
Were Yangzijiang to step away from taking over Rongsheng, then China State Shipbuilding Co (CSSC), the state run group covering southern Chinese yards, would likely be told to step in by Beijing.