China Shipbuilding to Raise 3.9 Billion Yuan to Cut Debt

Updated on
  • Company intends to sell stock in private sale to parent
  • Shares rise in Shanghai Wednesday after trading halt is lifted

China Shipbuilding Industry Co. plans to raise as much as 3.9 billion yuan ($587 million) through a private share sale to reduce debt.

The company intends to sell 718 million shares at 5.43 yuan each to its parent, China Shipbuilding Industry Corp., and two wholly owned units of the group, it said in a statement dated Tuesday to the Shanghai Stock Exchange.

Shipbuilders worldwide are seeking to raise funds after posting losses as orders declined or were delayed. Oil prices have fallen more than 50 percent in the past two years, damping demand for new vessels and offshore products.

China Shipbuilding’s parent will inject 3.16 billion yuan into the company, according to the statement. After the transaction, the parent will control 54.5 percent of the company, rising from 52.7 percent, the statement showed.

The shares are subject to a 36-month lock-up period, China Shipbuilding said. The plan still needs the approval of regulators and shareholders.

China Shipbuilding shares resumed trading Wednesday after being halted June 6. The stock gained 4.1 percent to close at 6.42 yuan in Shanghai, the highest price since May 5. The Shanghai Stock Exchange Composite Index rose 0.7 percent.

The company’s debt totaled 130.7 billion yuan as of March 31, giving it a debt-to-asset ratio of 69.1 percent. The level will drop to 67.04 percent after the debt repayment, the shipbuilder said.