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Rongsheng in talks to sell shipyard business

Rongsheng in talks to sell shipyard business
Troubled Chinese yard China Rongsheng Heavy Industries has confirmed that it is in talks to sell its shipyard business and focus on its new energy business.

The group said in a stock market announcement that it has entered into a memorandum of understanding (MOU) to sell the "related core assets and liabilities of the onshore shipbuilding and offshore engineering business of the group in the PRC" to a China-incorporated company.

The scope and list of related assets and liabilities and terms and arrangements of the deal are to be negotiated. The MOU runs out at the end of June. Previous reports had said Singapore-listed Yangzijiang Shipbuilding might be a potential buyer.

"In light of the depressed shipbuilding market, the shipbuilding  business of the group has encountered operational difficulties. The management of the company is committed to improving the  operational status by industry value-chain upgrade and business transformation, and also steadily developing its energy service business including oil and gas exploitation," Rongsheng said in explaining the rationale behind the sale.

"However, the high gearing of Jiangsu Rongsheng Heavy Industries has adversely affected the group in developing its energy service business. The potential transaction shall adjust and optimize the assets and business of the group, and divest the relevant assets and liabilities of the shipbuilding business and offshore engineering business, which shall help to ease the debt burden of the group, enhance the flexibility of fund utilization, better implement the strategy of business transformation and transformation into an energy service provider focusing in the oil and natural gas market," it continued.