Singapore-listed JES said that JEHI has sustained “significant financial losses” due to the decline in the shipbuilding industry as well as inadequate internal management. The yard is also impaired by a severe lack of liquidity and cashflow.
JES believes that the proposed implementation of a “consensual restructuring” between JEHI and certain of its creditors would maximise the value of JES and its assets for its creditors and shareholders.
“Compared with traditional debt and asset restructuring methods, the restructuring allows JEHI to carry on its business in the ordinary course of nature during the restructuring period, without the threat and distraction of proceedings and other action which may be taken by its creditors,” JES said.
If JEHI’s application to the court is successful, no other creditors will be able to commence a winding up application against the yard, and negotiations will be carried out with the creditors, JES explained.
In July 2014, JEHI was blacklisted by the Supreme People’s Court of China for refusing to repay its debt obligations. Five separate lawsuits were filed by equipment suppliers against the yard, but JEHI instead alleged that the suppliers did not fulfill their obligations to complete certain defect jobs.
JES owns a few other smaller subsidiaries including Jiangsu Nereus Shipyard and Jiangsu New Eastern Marine Engineering Equipment. The latter is one of the 'white list' shipyards in China.
Meanwhile, JES has terminated its proposed acquisition of a 51% stake in Congo’s forestry enterprise SCIBOIS. The termination followed an earlier lawsuit filed by JES against a Chinese businessman involved in the deal for a breach of a moratorium over the acquisition deal.
The shipbuilder has also terminated a planned placement of up to 183m new shares. Trading of shares in Singapore-listed JES has been suspended pending restructuring.
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