Guangzhou Shipyard International Co., a unit of China’s biggest shipbuilder, plans to sell HK$2.82 billion ($364 million) of new shares and use some of the proceeds to buy a yard from its parent and two partners.
The company will sell 387.5 million shares at HK$7.29 each to China State Shipbuilding Corp., its parent, and to Baosteel Group Corp. and China Shipping Group Co., according to a filing to Hong Kong’s stock exchange yesterday.
Guangzhou Shipyard, based in the southern Chinese city, will use 956 million yuan ($156 million) of the proceeds to buy CSSC Guangzhou Longxue Shipbuilding Co., now owned 60 percent by its parent, 30 percent by Baosteel and 10 percent by China Shipping.
The purchase of Longxue will provide a relocation facility for Guangzhou Shipyard, which is being forced out of its current city-center location by the Guangzhou municipal government in favor of residential and commercial development, according to the filing. Longxue is the biggest builder of modern large vessels in southern China, with an annual capacity of 3.5 million deadweight tons, and its yard can build bigger ships than Guangzhou Shipyard’s current site.
Guangzhou Shipyard was halted from trading in Hong Kong yesterday, pending the announcement. The stock will resume trading tomorrow in Hong Kong and on Oct. 8 in Shanghai, where the market is closed for the weeklong National Day break.
In August, China issued a three-year plan to urge financial institutions to support its troubled shipbuilding industry, the world’s biggest. Ship owners placing orders for China-made vessels, engines and some main parts should get better funding and some key companies will be allowed to issue corporate bonds, the State Council said in a statement released Aug. 4.