Singapore: Jaya Holdings, which sells and charters offshore support vessels, is acquiring a Chinese shipyard for 36 million yuan cash, reports the Business Times.
Jaya said in a statement that it had signed an agreement with Nantong Hengsheng Shipyard Co and Wong Kwok Keung to buy the entire issued share capital of Nantong Dongjiang Shipyard Co Ltd.
Under the agreement, an advance payment of 20 per cent will be made into an escrow account, which will be released upon the completion of the equity transfer.
Jaya said the balance will be payable over various stages. The acquisition will be financed through Jaya's internal resources.
CEO Chan Mun Lye said: 'China is attractive as a cost efficient and competitive shipbuilding centre.
'With the addition of this third shipyard, I expect the group to reap the benefits arising from the better economy of scale in our shipbuilding operations.'
Jaya said the acquisition will not only strengthen its position as a reputable builder and fleet owner of offshore support vessels but 'will also give us the capacity and flexibility to address opportunities in other shipping markets such as cargo vessels and oil tankers'.
The company hopes for synergies from having three shipyards, in Singapore, Batam and China.
'The transfer of expertise and technology from its Singapore shipyard to its Nantong shipyard will allow the latter to rapidly optimise its facilities and to take on higher valued shipbuilding projects,' it said.
This will in turn free the Singapore yard to move further up the value chain and concentrate on more specialised and high specification vessels.
Jaya also expects to benefit from access to cheaper Chinese ship components, toolings and spares which will benefit both its shipbuilding and ship chartering operations.
The acquisition is not expected to have any material impact on the earnings per share and net tangible asset per share of the Jaya Group for the current financial year. [11/09/07]
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