China Huarong in Distress
Aiswarya Lakshmi
Thursday, July 2, 2015
China Huarong Energy Co, formerly known as China Rongsheng Heavy Industries, said in a regulatory filing that a memorandum of understanding on the disposal of assets to an unnamed buyer has expired. Huarong announced in March a potential sale of its core shipbuilding and engineering business, subject to formal agreement.
Huarong Energy signed the MOU with the potential buyer in April for the sale of its shipbuilding assets as part of its restructuring process.
The MOU was effective until 30 June 2015, and the company and the potential purchaser have failed to agree to a deal.
A statement from the company says: "The Company wishes to inform the shareholders and potential investors of the Company that a formal sale and purchase agreement between the Company and the Potential Purchaser has not been concluded before the expiry of the MOU. The Company and the Potential Purchaser are continuing the process of negotiation on the Potential Restructuring involving the Potential Transaction. As at the date of this announcement, Jiangsu Rongsheng Heavy Industries has obtained conditional letters of consent from all of its creditor banks relating to the disposal of (including but not limited to) its assets and liabilities. The Group is now assisting the Potential Purchaser to establish an efficient and competitive professional core management team to enable Jiangsu Rongsheng Heavy Industries to enter into full production and obtain new orders immediately after completion of the Potential Restructuring. "
While Huarong Energy’s statement did not mention the name of the potential purchaser, privately-owned Yangzijiang Shipbuilding has earlier confirmed its interest to own a stake in the troubled compatriot shipbuilder.