SINGAPORE - Sembcorp Marine has entered into a sale and purchase agreement with China Ocean Shipping (Group) Company, or Cosco, to dispose of its 30 per cent stake in Cosco Shipyard Group.

The group is selling its interest in the Chinese ship-repair, conversion and shipbuilding group, which it acquired in 2004, for 1.06 billion yuan (about S$220.7 million.

The net proceeds from the sale amount to S$48.3 million and will be used for working capital, the company said in its announcement on Tuesday (Nov 15).

With the disposal, Sembcorp Marine will cease to have any interest in Cosco Shipyard except via its 4.98 per cent shareholding in Cosco Corporation (Singapore), which has in turn a 51 per cent stake in Cosco Shipyard.

Explaining the rationale for the divestment, Sembcorp Marine said the Chinese shipyard was no longer a strategic investment nor a core asset for the company.

"The disposal will not affect the nature of the group's main businesses," it said.

Cosco Shipyard undertakes ship repair, conversion and shipbuilding with six yards located in China's coastal cities.

Sembcorp Marine posted a S$21.8 million net loss for the third quarter ended Sept 30, due partly to its share of losses and impairment in Cosco Corp.