Titan puts new hope in China rigbuilding yard venture

According to local media reports Titan is in advanced talks with the un-named Singapore-based builder, possibly Sembcorp Marine's PPL Shipyard unit, to use its mothballed shipyard in Fujian that may be injected by major shareholder Guangdong Zhenrong Energy (GZE).

The South China Morning Post reported that GZE has been trying to win creditors over to its restructuring plan for Titan's over $400m debt since late last year. It is hoping this latest plan will turn the tide.

"The foundation for Titan's restructuring is the shipyard, which is potentially its only viable asset," said Titan chief executive Tang Chaozhang was quoted as saying. "Guangdong Zhenrong has been working hard to find a partner to make use of the asset and come up with a viable business model."

Tang revealed that in November last year, Titan signed a memorandum of understanding with the rig maker, which he said was a regional industry leader.

He said he was not able to give more details on the deal, citing a confidentiality agreement. Tang did say however that new rigbuilding equipment could be installed at the shipyard and added that the cost of equipment should not be a barrier to Titan's entrance to the new business, with some investors committing to pump in HKD700m ($90.3m) if the restructuring deal was successful. The key to the yard's success would be the Singapore partner's industry, he said.
These investors include Guangdong Zhenrong - a unit of state-owned commodities trader Zhuhai Zhenrong - Singapore-listed offshore oilfield services provider Falcon Energy and Titan's chairman Zhao Xuguang.

The planned shipyard would have an annual production capacity of eight rigs, Tang said.

Violet Siu, Titan's director of corporate communications, said restructuring needed support from at least 75% of voting bondholders. She added that a bondholders' meeting in November found that 81.7% of them were in favour of the restructuring proposal, which provided various cash-plus-shares and cash-or-shares options for bondholders and unsecured debt holders.