China's Rongsheng Signs MOU to Sell Shipbuilding Business

by Ship & Bunker News Team
Wednesday March 18, 2015

China Rongsheng Heavy Industries Group Holdings Limited [1101.HK] has announced that it has signed a memorandum of understanding that will see its shipbuilding business, Jiangsu Rongsheng Heavy Industries, sold to an undisclosed potential purchaser.

The deal involves the core assets and liabilities of both its onshore shipbuilding and offshore engineering business, though the company stressed that a formal transaction agreement is still pending. 

According to the company, the depressed shipbuilding market had led to operational difficulties at Jiangsu Rongsheng Heavy Industries, while its highly-leveraged state was also interfering with the company's efforts to expand in oil and gas exploration elsewhere. 

"The Potential Transaction shall adjust and optimize the assets and business of the Group, and divest the relevant assets and liabilities of the shipbuilding business and offshore engineering business, which shall help to ease the debt burden of the Group, enhance the flexibility of fund utilization, better implement the strategy of business transformation and transformation into an energy service provider focusing in the oil and natural gas market," said the company. 

It was reported in 2012 that in the face of market difficulties, China Rongsheng Heavy Industries had turned its focus to building containerships with a "green design" as one its key products. 

However, a year later, the company was reported as saying that the Chinese shipbuilding industry was still experiencing "unprecedented challenges" as demand waned and ship prices failed to increase.