COSCO Shipping International (Singapore) has decided to sell equity interest in its shipyard assets for a price of CNY 1.46 billion (USD 211.5 million) to COSCO Shipping Heavy Industry.
In an effort to centralize operations and management, the company said it will dispose of a 51% equity interest in COSCO Shipyard Group, a 50% equity interest in COSCO (Nantong) Shipyard and a 39.1% equity interest in COSCO (Dalian) Shipyard.
“The proposed disposal will enable the company to exit from a loss-making business and create cash for investment in potential future new businesses, substantially reduce the company’s debt and improve the company’s financial position,” Gu Jing Song, Vice Chairman and President of the company, said.
COSCO Shipping International said that the completion of the sale and purchase is conditional upon approval of the company’s shareholders.
The company intends to use the sale proceeds from the disposal to fund future projects, which may include mergers and acquisitions, and for working capital requirements of the Group.
In a separate announcement the company said that it ended the first quarter of 2017 with a widened net loss which reached SGD 78.9 million, compared to a net loss of SGD 14.3 million reported in the quarter ended March 31, 2016.
The group’s turnover for the period was at SGD 401.8 million, representing a drop of 44 percent against a turnover of SGD 722.2 million seen a year earlier.
Turnover from shipyard operations decreased 45 percent to SGD 392.6 million on lower revenue contributions from ship repair, ship building and marine engineering, while the turnover from dry bulk shipping and other businesses recovered 63 percent to SGD 9.2 million on higher charter rates.
The group’s gross order book of USD 5.8 billion includes several offshore marine engineering projects which have been substantially completed in construction but are yet to be delivered due to customers’ requests for extension of delivery. This order book continues to be subject to revision from any new, cancellation, variation or scheduling of orders that may arise.
COSCO Shipping International said that it expects these “difficult and challenging business and operating conditions to persist or even worsen. As such, 2017 will remain a very difficult year for the group.”