China Rongsheng to Sell Shipbuilding, Offshore Assets
China Rongsheng Heavy Industries Group Holdings Ltd. has signed a preliminary agreement to sell its assets to an unnamed Chinese investor. The company reported in a statement Monday that it planned to sell its core shipbuilding and offshore engineering businesses and has entered into an exclusivity period while the buyer values the company’s assets and liabilities. The initial agreement will expire on June 30, China Rongsheng said in the statement.
The company, which is China’s largest shipbuilder, fell behind on principal and interest payments on over $1 billion in bank loans after the global financial crisis halted new ship orders. Rongsheng’s difficulties emphasize the struggles shipbuilders are having to face when going up against shipyards owned by the government and that have government funding. Despite the fact that losing the company could result in thousands of job losses, the Chinese government has displayed unwillingness to support failing shipbuilding and offshore engineering facilities.
In 2011, China Rongsheng had close to 30,000 employees, which has since declined to a mere 12,000 in recent years.
Rongsheng’s asset sale will help alleviate the company’s debt troubles and allow it to continue a restructuring that is planned to be completed before the June 30th date. Rongsheng has presented a name change to China Huarong Energy Co. to better depict its new business aim: the oil and gas market.