China’s largest private shipbuilder Rongsheng loss deepens, in talks with banks

April 14, 2014 Leave a comment

China Rongsheng loss deepens, shipbuilder in talks with banks

9:30pm EDT

(Adds details, quotes)

HONG KONG, March 31 (Reuters) – China Rongsheng Heavy Industries Group, the country’s largest private shipbuilder, posted a second straight annual loss on Monday due to shrinking orders and said it was in talks with 10 Chinese banks about the repayment of loans.

Analysts have said Rongsheng could be the biggest casualty of a local shipping industry suffering from overcapacity during a global shipping downturn, amid mounting concerns of defaults in China as a credit crunch takes a toll.

Rongsheng said the group’s borrowings included 127 million yuan ($20.4 million) that was overdue and had not been renewed or repaid. Its total borrowings and finance lease liabilities stood at 22.41 billion yuan, of which 13.71 billion is due within 12 months.

“We have signed a framework agreement with over 10 principal banks to establish a debt optimisation syndicate, for the purpose of ensuring our stability of operations and improving our state of liquidity,” Rongsheng said in a statement.

The banks include Bank of China, The Export-Import Bank of China and China Minsheng Bank.

China Rongsheng logged a net loss of 8.68 billion yuan ($1.40 billion) for the fiscal year ending December 2013, much bigger than its net loss of 572.6 million yuan a year earlier.

A builder of Vale’s large ore carriers, the company asked the government for financial help last July and warned in December that it faced a substantial full-year loss.

China Rongsheng said on Monday it believed the recession in the shipbuilding market had come to an end, and it planned to focus more on large liquified natural gas carriers thanks to increasing demand for new energy sources.

It also cut the remuneration package of senior and middle management by 30 to 50 percent from a year earlier. As of the end of December 2013, the company had 4,738 employees, down 28 percent from the previous year.

Rongsheng said it had won orders to build 23 vessels worth $726 million in 2013, well below its target of $1.8 billion worth of contracts.

Shares in China Rongsheng fell 2.5 percent in early trade in Hong Kong, lagging a 0.8 percent gain in the benchmark Hang Seng Index.

 

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