China shipbuilding to raise 3.9bn yuan to cut mounting debt

Beijing / Bloomberg

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 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 gained 5.8 percent to 6.53 yuan as of 10:20 a.m. in Shanghai trading, the highest intraday price since May 5. The shares rose as much as 9.6 percent earlier Wednesday, when they resumed trading after being halted June 6.
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, theshipbuilder said.