The bond was issued in May 2015 carrying an interest of 7.95% and payment was due on 16 May this year.
Sinopacific, majority owned by EHG, operates two shipyards – Zhejiang Shipyard and Yangzhou Dayang Shipyard, both of which are ‘white list’ shipyards, a policy initiated by Beijing to allow the listed yards to gain prioritised access to domestic bank loans.
Another of EHG’s subsidiary, Sinopacific Offshore & Engineering (SOE), is also a ‘white list’ yard. SOE has been sold by Sinopacific to CIMC Enric Holdings for it to own 63.31% equity interest while EHG continues to own the remaining 36.69% stake.
The OSV focused Zhejiang Shipyard has met a more cruel fate as it has filed for bankruptcy earlier this month after a futile struggle amid the crash in the offshore oil and gas sector. Dayang Shipyard, which builds bulk carriers, has seen its cashflow dried up leading to unpaid wages and stalled operations.
The severe recession of China’s shipbuilding industry has brought about widespread bankruptcy, wiping out thousands of small to medium sized shipbuilding enterprises. Privately-owned Sinopacific, once one of the most successful shipbuilders known for its inhouse designs and international standards, has virtually gone bust, regardless of the ‘white list’ status of its subsidary yards.
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