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Court Approves China Rongsheng Legal Action to Reclaim $103 Million

By MarEx 2013-07-11 08:35:00

A court has granted a unit of China Rongsheng Heavy Industries approval to proceed with legal action to reclaim a 630 million yuan ($103 million) security deposit a week after China's biggest private shipbuilder asked for financial help.

China Rongsheng said in a statement to the Hong Kong Stock Exchange late on Thursday that Jiangsu Rongsheng Heavy Industries had placed the deposit while bidding for a stake in the Anhui Province Property Rights Exchange.

China Rongsheng owns 96.09 percent of Jiangsu Rongsheng, according to the company's 2012 annual report.

China Rongsheng asked the government and its biggest shareholders for financial help last week after cutting its workforce and delaying payments to suppliers, while warning of a net loss for the first half of 2013.

Analysts said the company could be the biggest casualty of a local shipping industry suffering from overcapacity and shrinking orders amid a global shipping downturn.

($1 = 6.1341 Chinese yuan)

Reporting by Clement Tan in Hong Kong and Keith Wallis in Singapore; Editing by Miral Fahmy (C) Reuters 2013.