Cosco parent to buy out shipyard business

China Cosco Shipping Corp says it will buy out the shipyard businesses of its Singapore-listed unit Cosco Corp, including its equity interests in Cosco (Dalian) Shipyard (above).
China Cosco Shipping Corp says it will buy out the shipyard businesses of its Singapore-listed unit Cosco Corp, including its equity interests in Cosco (Dalian) Shipyard (above).PHOTO: COSCO CORP (SINGAPORE)

Buyout offer comes as Singapore-listed Cosco Corp reports another year of losses

The parent firm of Cosco Corporation (Singapore) has offered to buy out its shipyard businesses as part of a company-wide restructuring.
 

The news came as Singapore-listed Cosco Corp reported a full-year net loss of $466.5 million yesterday.

Under the proposed deal, China Cosco Shipping Corporation, the parent group, will acquire Cosco Corp's interests in Cosco Shipyard Group, Cosco (Nantong) Shipyard and Cosco (Dalian) Shipyard.

"The plans relating to the proposed acquisition will be further reviewed and determined after further necessary work, including a valuation of the assets to be acquired, has been completed," Cosco Corp said in a statement yesterday.

It added that it has not entered into any definitive agreement with any party and there is no assurance that any transaction will materialise.

  • AT A GLANCE

    NET LOSS: $466.5 million (-18%)

    REVENUE: $2.56 billion (-27%)

    DIVIDEND PER SHARE: None

The buyout offer is part of China Cosco Shipping's efforts to restructure the shipyard business to "centralise operations and management", said Cosco Corp.

It also said China Cosco Shipping has said it will "continue to remain supportive of (Cosco Corp's) future development".

Cosco Corp has businesses in offshore marine engineering, shipbuilding, ship repair and conversion, as well as dry bulk shipping.

The company managed to narrow losses last year with a net loss of $466.5 million for the 12 months ended Dec 31 - an 18 per cent improvement over the net loss of $570 million a year earlier.

This was as the "losses in shipyard and shipping operations were partially cushioned by an increase in other income and decrease in trade provision", it said.

Revenue dropped 27 per cent to $2.56 billion on the back of lower shipyard and shipping turnover.

Loss per share came in at 20.83 cents, compared with the loss per share of 25.45 cents previously. Net asset value per share stood at 15.01 cents as at Dec 31, well down on the 36.71 cents as at the same time a year earlier.

Cosco Corp vice-chairman and president Gu Jing Song said: "2017 continues to be tough sailing for our group under cloudy skies and tumultuous external headwinds engulfing the shipping and marine industries.

"Amidst continuing weakness in the state of the global economy, challenging market conditions and depressed crude oil prices, an increasing number of the group's customers may be unable to meet their contractual payment obligations to the group."

The group expects a possible decline in new orders and more project delivery delays or deferment requests from some customers.

Trading has been suspended for Cosco's shares, which last closed at 28 cents on Dec 16 last year.

A version of this article appeared in the print edition of The Straits Times on February 25, 2017, with the headline 'Cosco parent to buy out shipyard business'. Print Edition | Subscribe