Restructuring specialists in Hong Kong are wetting their lips at the prospect of getting on the deal to restructure troubled major private Chinese yard China Rongsheng Heavy Industries Group, although prospects that it will go to a non-Chinese firm seem dim.

Rongsheng said in a stock market announcement last week that it has been “notified by a government authority that they are procuring an independent third party to consider and, if appropriate, to initiate a potential restructuring involving Jiangsu Rongsheng Heavy Industries”.

Rongsheng’s Jiangsu unit is a major subsidiary, contributing 90% and 91.4% of the total revenue of the Group for the year ended 31 December 2013 and the six months ended 30 June 2014, respectively.

The group warned that although it does not currently have details on the potential restructuring, it “might involve a restructuring of assets, business, debt and/or equity and might involve a dilution of its equity interest attributable to the group”.

“We have been monitoring this situation for the past few years,” ship finance consultant Turnbull Smith managing director Michael Smith told Seatrade Global. He added, however, that going by the past experience of the restructuring of state-owned firms CSC Phoenix and Nanjing Tankers, it is “very unlikely foreign parties will be involved”.

Turnbull suggested though that Rongsheng, being a private enterprise may be given a different treatment. He also pointed out that it would be a complex deal and a “major undertaking” that would require an experienced team with knowledge of various elements of marketing, debt restructuring and shipyard management and suggested this expertise might best be found in Hong Kong. Other restructuring specialists such as Alix Partners are believed to also be interested but have declined to comment.

“The important thing is to get the company back on the right track,” he concluded. Rongsheng is financially strapped and recently had four panamaxes cancelled by Dryships apparently due to cashflow problems in fulfilling the orders.

Ironically Rongsheng made it to the Chinese government’s latest white list of 51 approved yards. But its financial woes have meant it has missed out on the rise in new ship orders this year.

First half revenue plunged 78% to RMB341m ($55.5m) as it avoided low-price orders. Meanwhile current liabilities exceed assets by about RMB12.3bn as at June 30, and it remains overdue on RMB262m of bank loans.

However, indicative of Rongsheng’ status, the banks have not called in these loans and it has also received preliminary consent from a bank for a waiver on a RMB609m loan-to-value covenant. Management had said recently that it believes there is strong motivation from Jiangsu state authorities to help it.