Singapore-based Sembcorp Marine entered into an agreement to sell its 30% stake in Cosco Shipyard Group (CSG) in a US$156 million (S$220.68 million) deal with China Ocean Shipping Group Co. (COSCO), eliminating the majority of Sembcorp’s interest in CSG.
CSG is a ship repair, conversion and shipbuilding group in China which owns six major shipyards that are located in the key coastal cities stretching from Dalian in the north, Nantong, Shanghai, Qidong and Zhoushan in the center, to Guangzhou in the south.
Sembcorp Marine acquired its 30% stake in CSG in 2004. However, Sembcorp has decided that CSG is no longer a strategic investment nor a core asset of the group.
“The disposal will not affect the nature of the group’s main businesses,” Sembcorp Marine said. “The company will use the net proceeds from the proposed sale for working capital.”
Following completion of the deal, Sembcorp Marine will cease to have any interest in CSG except via its 4.98% shareholding in Cosco Corp. (Singapore) Ltd, which in turn has a 51% equity interest in CSG.
The sale of the shares in CSG under the SPA is conditional upon approvals by the relevant Chinese regulatory authorities, internal approvals and the issuance of a new Foreign-Investment Enterprise Certificate taking place on or before 31 December 2016, or such other date as may be agreed between the company and COSCO. If any of the conditions are not satisfied on or before 31 December 2016 or such other agreed date, the SPA will be terminated.
Last month, Sembcorp Marine posted a 26% loss in its group revenue, citing the tough operating environment; and revealed the company had cut a total of 8000 jobs spanned over the timeframe from 2015, comprised of both employees and subcontractors.
Also in October, Sembcorp Marine agreed to buy the remaining 30% stake in Sembmarine North Sea that it doesn't already own.
Read more:
Subscribe
