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JES to sell distressed shipbuilding units to private investor for $500,000

JES to sell distressed shipbuilding units to private investor for $500,000
JES International Holdings has decided to sell its debt-ridden and struggling core shipbuilding business for half a million to an asset and equity restructuring investor Hong Kong Victo International Limited.

Singapore-listed JES said the sale included its wholly-owned Jiangsu Eastern Heavy Industry Co (JEHI) and Jiangsu New Eastern Marine Engineering Equipment Co (JNEME), and its 49%-owned Jiangsu Nereus Shipyard (JNS)

The Hong Kong-registered investor, owned by Zeng Zhen, will take on the shipyards’ known debts of approximately RMB1.96bn ($298.74m), which exceeded their combined fixed asset value of RMB1.53bn. The investor will also take on the shipyards’ trade payables amounting to around RMB558.46m owing to various creditors.

“Notwithstanding that the known bank debts exceed the fixed asset value of the disposal companies, the company was able to negotiate for the consideration of $500,000 and the adjustment amount for the prosposed disposal,” JES stated.

“The purchaser has additionally agreed to take the place of the company in liaising with the Jiangsu High Court and indemnify the company from and against all actions, claims, damages, liabilities, losses, proceedings, costs and expenses in relation to the proposed restructuring, up to SGD50,000 ($35,700) from the date of the sale and purchase agreement,” it added.

JEHI, one of the shipyards to be disposed, is waiting for a court decision over its application for a proposed restructuring scheme with some creditors. The restructuring effort by the yard is now pending a decision from Jiangsu High People’s Court.

“The management has spoken to several established shipbuilding companies in China. However, all have declined to make an offer for the disposal companies due to the high level of known bank debts and the delay in the proposed restructuring. The purchaser has had experience in debt restructuring, and is influential in China and able to assist the disposal companies in the completion of the proposed restructuring,” JES explained.

Due to the application for the proposed restructuring, JEHI has ceased operations. JNEME and JNS, on the other hand, are both dormant companies.