Bank accounts of one of China's largest private domestic containership owners have been frozen by a shipbuilder's court action in the midst of admissions of misuse of funds by the shipowner's management.

The court action and stock-market disclosures have left Ansheng Shipping in financial turmoil and sent shares in parent Antong Holdings into free fall.

Former chairman Guo Dongze, one of the company's major shareholders and co-founders, has already returned CNY 2.9bn ($420m) of company funds with interest, according to a Shanghai Stock Exchange announcement.

However, a share sell-off continues, as does the court action by Fujian Southeast Shipbuilding.

Frozen assets

Ansheng Shipping and sister company Antong Logistics are the sailing and shoreside arms of Shanghai-listed Antong Holdings, which is controlled by brothers Guo Dongze and Guo Dongsheng. Xiamen Maritime Court has frozen their shares in the company — just over 54% — in response to Fujian Southeast's petition to freeze CNY 55.7m in assets.

A rapid deflation of the company's share value during the past two weeks has put in limbo a 12-ship newbuilding programme of 640-teu vessels previously reported to be underway at Fujian Southeast, Fujian Mawei Shipbuilding and Nantong Xiangyu Marine Equipment. The 12 ships were reportedly worth CNY 784m but it is not clear whether work was taking place at all three yards.

Antong's troubles have also torpedoed a planned private placement of CNY 3.3bn-worth of new shares, announced last September and targeted for completion this month.

Chinese business and shipping media reports say the misused funds had been diverted during 2018 to bolster the finances of related non-public entities under heavy financial pressure.

Allegations

During the same period, the parent company allegedly issued improper corporate guarantees for CNY 2bn-worth of external loans, including a CNY 300m loan to Great Wall Run Heng Financial Leasing.

This company is owned 63% by a private investment vehicle of the Guo brothers.

Company officials did not respond to enquiries from TradeWinds.

Antong Holdings won its place on the Shanghai Stock Exchange through a back-door listing in October 2016.

At that time, the Guo brothers acquired Shanghai-listed chemical company Heihua, sold its assets to a competitor and used the resulting shell company as a public platform for their rapidly growing domestic container logistics operations, which continued as Ansheng Shipping and Antong Logistics.

Ansheng Shipping's financial troublescould affect the competitive dynamics in a highly concentrated internal market.

At the time of the listing, Chinese analysts attributed more than three-quarters of the domestic container shipping market to just three shipowners.

These are state-owned giant Cosco with a 48% share and privately owned competitors Ansheng Shipping and Zhonggu Shipping with about 14% each.