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Rongsheng seeks support after cutting workfoce
By Richard Fu |
July 5, 2013, Friday
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Online Edition
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CHINA Rongsheng Heavy Industries Group Holdings Ltd, the nation's largest private shipbuilder, said it is "actively" seeking government financial support after cutting jobs amid an industry downturn.
The company also said it is expected to post a net loss in the first half of the year as orders slumped for ships.
Today's announcement sent its shares in Hong Kong down as much as 17 percent today. Trading was suspended yesterday after the Wall Street Journal said the company laid off 8,000 workers.
The company is actively seeking financial support from the government and big shareholders, the statement said. One shareholder, Rongsheng's founder Zhang Zhirong, has agreed to provide an interest-free 200 million yuan (US$32.6 million) loan to Rongsheng, the shipbuilder said.
Zhang's loan grant may reflect how urgently Rongsheng needs cash to ease financial pressure.
Zhang stepped down as chairman of Rongsheng last year after he was involved in an insider-trading scandal in the United States.
The company also said it's in discussion with a number of banks and financial institutions for renewing existing credit facilities to "ease the pressure on the group's working capital and ensure the group's stable production and operations."
Rongsheng said it has "implemented workforce restructuring and optimization" as part of a strategy to transform itself into an integrated heavy industry conglomerate with a focus on severing clients in the offshore energy sector, in response to a slump in the shipbuilding industry.
The company set up an offshore marine equipment unit in Singapore last year.
The order book at Chinese shipyards fell 23 percent in the first five months compared with a year earlier, according to the Chinese Association of the National Shipbuilding Industry.
The company also said it is expected to post a net loss in the first half of the year as orders slumped for ships.
Today's announcement sent its shares in Hong Kong down as much as 17 percent today. Trading was suspended yesterday after the Wall Street Journal said the company laid off 8,000 workers.
The company is actively seeking financial support from the government and big shareholders, the statement said. One shareholder, Rongsheng's founder Zhang Zhirong, has agreed to provide an interest-free 200 million yuan (US$32.6 million) loan to Rongsheng, the shipbuilder said.
Zhang's loan grant may reflect how urgently Rongsheng needs cash to ease financial pressure.
Zhang stepped down as chairman of Rongsheng last year after he was involved in an insider-trading scandal in the United States.
The company also said it's in discussion with a number of banks and financial institutions for renewing existing credit facilities to "ease the pressure on the group's working capital and ensure the group's stable production and operations."
Rongsheng said it has "implemented workforce restructuring and optimization" as part of a strategy to transform itself into an integrated heavy industry conglomerate with a focus on severing clients in the offshore energy sector, in response to a slump in the shipbuilding industry.
The company set up an offshore marine equipment unit in Singapore last year.
The order book at Chinese shipyards fell 23 percent in the first five months compared with a year earlier, according to the Chinese Association of the National Shipbuilding Industry.
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