China Rongsheng Still in Talks to Restructure Unit

2014-09-24

China Rongsheng Heavy Industries said Tuesday that it was still in talks with third parties to help with the potential restructuring of its main Chinese shipbuilding unit.

The company said in a statement that it still was in the process of identifying and selecting the parties to help implement the restructuring program for Jiangsu Rongsheng Heavy Industries Co.

The planned restructuring comes as China Rongsheng struggles with a prolonged downturn in the shipbuilding industry amid persistent oversupply of shipping capacity. The Chinese shipbuilder’s first-half net loss widened to 3.06 billion yuan ($498 million) from a net loss of 1.26 billion yuan a year earlier due to higher finance costs and weaker demand for new ships. Its first-half revenue plunged by 78% to 340.6 million yuan as some ship-owners postponed the delivery of new ships, which led to a reduction in production at its shipyards.

The debt-ridden company’s current liabilities exceeded its current assets by around 12.31 billion yuan at the end of June. Total borrowings stood at 23.20 billion yuan as of June, with 74% of the debt due next June.

Trade in China Rongsheng was halted on Aug. 29 pending an announcement related to its possible restructuring. The company didn’t say when its Hong Kong-listed shares would resume trading.

Source from : Dow Jones

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