China Rongsheng Says Zhang Gives Up Controlling Stake
Zhang Zhirong, one of the richest men in China, gave up his controlling stake in China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the country’s largest shipbuilder outside state control, which he co-founded.
The former chairman has reduced his interest to 29.32 percent from almost 48 percent in transactions with his father and Rongsheng’s new head, according to a company filing to the Hong Kong stock exchange yesterday. He remains the biggest shareholder, it said.
Zhang stepped down as chairman of China Rongsheng and Glorious Property Holdings Ltd. (845) in November after a different company he controlled agreed to pay $14 million to resolve a U.S. insider-trading claim. His departure was unrelated to that, his public relations firm said at the time.
“We think that for the chairman to buy from a major shareholder shows his confidence in the future development of the company,” Michael Cheng, a China Rongsheng spokesman, said by phone.
Zhang sold a 7 percent stake to a company owned by Chen Qiang, Rongsheng’s new chairman, chief executive officer and co- founder, for HK$820.3 million ($105.8 million), or HK$1.674 a share, according to the filing. The CEO can’t sell his stake within a five-year lockup, Rongsheng said.
Zhang also transferred an 11.43 percent stake to his father, Zhang Dehuang, at no charge, the company said. Zhang Zhirong will be deemed to be interested in 2.05 billion shares in the company after the two transfers, Rongsheng said.
The sale comes amid a slump in the shipping industry. In December, the company forecast its first annual loss in four years. It had previously posted an annual loss in 2008, according to data compiled by Bloomberg.
The company announced the disposal after the Hong Kong stock market closed yesterday. The stock dropped 2.4 percent to HK$1.61 yesterday, bringing its 12-month decline to 33 percent. The city’s benchmark Hang Seng Index has gained 17 percent over the same period.
Rongsheng is setting up a new offshore-energy equipment unit as it seeks contracts for oil rigs and tender barges to offset slowing ship demand.
To contact the editor responsible for this story: Hwee Ann Tan at email@example.com