China Rongsheng enters agreement to sell onshore shipbuilding, offshore engineering business
China Rongsheng Heavy Industries (RSHI) on March 10 2015 entered into a Memorandum of Understanding (MoU) with an undisclosed Purchaser to sell the related core assets and liabilities of the onshore shipbuilding and offshore engineering business of the Group in the PRC, the RSHI press release said.
Both parties shall further negotiate the scope and list of related assets and liabilities and terms and arrangements of the Potential Transaction.
The Company wishes to emphasise that the Potential Transaction is subject to (amongst others) the signing of a formal transaction agreement, the final terms and conditions of which are still under further negotiations by both parties.
The MOU shall remain in effect until 30 June 2015. If the related parties have not entered into a related formal transaction agreement by that date, they shall further negotiate and confirm whether they should sign an extension of the MOU.
The move of China Rongsheng was due to the operational difficulties the Group has encountered with amid a slowdown in shipbuilding market, the Company said.
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. 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.
China Rongsheng Heavy Industries is a leading large-scale heavy industry enterprise group. RSHI owns two manufacturing bases of shipbuilding and offshore engineering in Nantong of Jiangsu Province and diesel engine in Hefei of Anhui Province both approved by NDRC, covering wide services ranging from shipbuilding, offshore engineering, power engineering, engineering machinery and etc.
