Hong Kong-listed shipowner Asia Energy Logistics (AEL) is calling time on a bulker investment company after years of weak rates.
The group said it is liquidating its subsidiary, Ocean Path's Ocean Jade Investments.
Alongside an unnamed partner, Ocean Jade owns 50% of a joint venture (JV) called Ocean Pro Holdings, which controls two 35,000-dwt handysizes operating in the Chinese domestic shipping market.
AEL will record a gain of HKD 169m ($21.8m) from the deconsolidation of Ocean Jade.
John Ayres of FTI Consulting has been appointed liquidator of British Virgin Islands-registered Ocean Jade, taking custody and control of the assets.
Ships not added
AEL started its shipping business in May 2010 through the investment in Ocean Pro.
A total of four vessels were to have been acquired — two by each partner.
"However, due to the continuing poor shipping market conditions in the past years, the JV group had not acquired the remaining two vessels as planned," AEL said.
The two companies had agreed not to enforce the agreement to buy more ships until AEL's financial position improved and markets recovered to a level that would justify the investment.
For the year ended 31 December 2019, AEL recognised a 50% share of the loss of the joint venture totalling HKD 17.7m.
Its losses in the venture for last year and 2018 exceeded its investment, AEL said. Ocean Pro had been losing money since its formation and would continue to do in the foreseeable future, it added.
No future for investment company
The investment was not seen as viable and profitable, particularly as the group continues to operate its own fleet of vessels.
"The board is of the view that putting Ocean Jade into liquidation is in the best interests of the company and its shareholders as a whole, principally because this will enable the company to reduce its losses in connection with the joint venture, whereas the resources and management efforts can be placed on the shipping and logistic businesses operated by the group itself," AEL's directors said.
AEL has not provided any guarantees to indemnify the liabilities of Ocean Jade.
The parent's owned and chartered fleet totals 92,000 dwt.
Clarksons lists AEL as owning the 28,100-dwt Asia Energy (built 2001).
