Li Jian Hong, chairman of China Merchants, believed the time is ripe to raise its competitiveness through fleet expansion, taking advantage of current lower newbuilding prices. The price tag for one new VLCC is approximately $90m, 37% lower compared to the peak price seen in September 2008.
China Merchants is working to raise RMB5.56bn ($882.5m) to purchase the 10 VLCCs. It intends to raise RMB2.89bn from the issuing of not more than 858m number of shares to designated investors at RMB3.37 per share. The remaining amount will be borrowed from various banks in US dollars.
If the funds can become available early this year, China Merchants will expect to take delivery of the first six VLCCs in 2013 and four more in 2014.
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