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Yangzijiang confirms interest in Rongsheng stake

Yangzijiang confirms interest in Rongsheng stake
Privately-owned Yangzijiang Shipbuilding has confirmed its interest in taking a stake in troubled compatriot Rongsheng Heavy Industries, which is currently going through a restructuring.

Ren Yuanlin, executive chairman of Yangzijiang, revealed at a press briefing in Singapore on Thursday that his company is only interested in investing in Rongsheng at the moment, rather than complete takeover of the shipbuilder.

But the potential investment into Rongsheng is at an early stage, and Ren made clear that the deal may or may not happen for Yangzijiang. He pointed out Rongsheng has existing assets and facilities that are attractive and would add value to Yangzijiang, provided the acquisition terms and conditions are mutually agreed by both parties.

“There is no decision on the Rongsheng deal at the moment. The Chinese government would like us to invest in Rongsheng but we need to look at the value of the investment before making a decision,” Ren said.

In March this year, Yangzijiang announced it has been approached by the relevant Chinese authorities to consider taking a stake in ailing Rongsheng. Back then, Ren already said that any acquisition decisions need to be based on timing, price and market conditions.

The potential deal between Rongsheng and Yangzijiang is expected to arrive at a clearer stage by June this year, according to Ren, the same month that Rongsheng expects its restructuring to be comnpleted.

Meanwhile, Singapore-listed Yangzijiang reported a dip in first quarter earnings compared to year-ago figures. Net profit for the quarter was recorded at RMB706.88m ($113.92m), down 12% from RMB799.19m in the same period of 2014.

Revenue also dropped by 14% year-on-year to RMB3.04bn due mainly to lower contributions from the shipbuilding related segment.

As at 30 April 2015, the group’s outstanding orderbook stood at 114 vessels with a total value of $4.6bn, and will keep the yards utilised until at least the end of 2016.

In shipbuilding orders, Yangzijiang announced it has entered into contracts with Seaspan Corp for options of additional six units of 10,000 teu containerships, after the shipowner recently exercised options for two of the 10,000 teu boxships.

This brings Seaspan’s 10,000 teu boxship orders at Yangzijiang to 13 firm contracts and 18 options.