Aug. 17 (Bloomberg) -- Cosco Shipping Co., a unit of China's biggest shipping company, said it plans to sell 1.05 billion yuan ($138 million) of convertible bonds to buy six ships.

The four multipurpose vessels and two semi-submersibles, used to move oil rigs, have a combined capacity of 200,000 tons, the company said in a statement to Shanghai's stock exchange today. Shareholders will vote on the planned sale of bonds that can be converted into stock on Sept. 3, it added.

Chinese shipping companies have expanded their fleets because the country's surging trade is driving up freight rates. The Baltic Dry Index, a benchmark for the price of carrying coal, iron ore and other commodities, has jumped 66 percent to a record this year.

Cosco Shipping ``will continue to gain from a niche market for handling conventional cargoes like machinery,'' said Luo Xiong, an analyst at China Merchants Securities Co. in Shanghai. ``Conventional cargo rates will climb in line with dry bulk rates.''

Bondholders will receive call warrants for each six-year bond they hold, Cosco Shipping, based in the southern Chinese city of Guangzhou, said. Two warrants confer the right to buy one share, the company said, without saying how many warrants would be linked to the bond sale.

Cosco Shipping shares rose 2.9 percent to 29.12 yuan in Shanghai. The stock, which resumed trading today after being suspended on Aug. 7, has more than doubled this year.

China's exports rose 27 percent in the first half, while imports climbed 18 percent. About 90 percent of world trade moves by sea.

Cosco Shipping, controlled by China Ocean Shipping (Group) Co., had 85 ships with a total capacity of 1.38 million deadweight tons as of June 30.

To contact the reporter on this story: Irene Shen in Shanghai at ishen4@bloomberg.net; Jiang Jianguo in Shanghai at jjiang@bloomberg.net

Last Updated: August 17, 2007 04:47 EDT