Former Rongsheng on way to debt dealFormer Rongsheng on way to debt deal

"The company wishes to inform the shareholders and potential investors of the company that, with the support of the government authorities, through friendly negotiations, the company and the relevant financial institutions are accelerating the implementation of and promoting a material asset reorganisation and optimised debt restructuring proposal of Jiangsu Rongsheng Heavy Industries and the proposal has been affirmed by relevant parties," it said.

Huarong said it had entered into conditional letters of intent with more than 10 major institutional creditors to basically write off the debts of its shipbuilding business in exchange for shares.

The restructuring programme covers mainly the company’s shipbuilding segment subsidiaries and its related companies namely, Nantong Rongye Storage, Jiangsu Rongsheng Heavy Industries, Jiangsu Rongsheng Shipbuilding, Shanghai Rongsheng Shipbuilding Trading, Hefei Rong An Power Machinery, Rongsheng Machinery and Hefei Zhenyu Engineering Machinery.  

"The board believes that the disposal of liabilities would accelerate and facilitate the progress of negotiation of the potential restructuring by easing the debt burden of the group and enlarging the equity base of the company," Huarong said.

The debt restructuring will ease the group's debt burden and enhance the flexibility of fund utilisation while streamlining the shipbuilding business and mitigate the adverse effect of the high gearing of the Group on its expansion in the energy service industry so that it can complete its strategy of moving into the energy development business.Huarong warned however that the agreement is still subject to negotiation.