Rongsheng cited unspecified, recent media reports of the detention on an unrelated charge, in Beijing of Wang Ping, whose Kingwin Victory Investment was supposed to pick up most of the warrants and pump capital into the company.Wang's company had agreed late last year to subscribe for HKD510m ($65.8m) worth of warrants Rongsheng was selling that would eventually have given him a substantial stake in the company.
On completion, Wang would have held about 17% of Rongsheng, second only to largest shareholder billionaire Zhang Zhirong who holds 19.58%.
"The company has no information as to the details of the incident and has been unable to contact Wang Ping, which casts doubt over the ability of the subscriber to perform its obligations under the Subscription Agreement prior to the Long Stop Date of 31 March 2015," Rongsheng said in the statement.
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"In light of the current circumstances, the board has decided that it is not in the best interests of the company and its shareholders to proceed with the Warrant Issue," Rongsheng noted, adding that it would seek legal advice on the matter.
It is now unclear how Rongsheng will meet its funding needs. Around 80% of the proceeds were to have been used on an oil project in Kyrgyzstan to help the company offset the impact of the lacklustre shipbuilding industry.
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