The indebted Singapore-listed firm plans to buy a stake in aforestry asset in the Democratic Republic of Congo that it says is potentially worthas much as $3bn, a stock exchange filing reveals.
In a move that echoes its $100m investment in a Chinese miningconcession last year, JES will spend $65m on a 51% holding in SCIBOIS whichowns a forest harvesting contract in the central African country until 2036.
“The Group believes that this acquisition is an excellentopportunity to diversify our cyclical shipbuilding business,” Jin Xin, chairmanand CEO said in a statement.
“The target already has a forest harvesting license for a sizeableforest area. With fresh funding, the operations can be scaled up significantly torealise the full potential of this venture,” he added.
The investment would guarantee a pre-tax return of $170mover four years during which SCIBOIS will seek a $450m listing on a “reputable”stock market, JES says.
A guaranteed profit would also give the shipbuilder the collateralto tap financial markets for urgently needed funds to shore up its balancesheet which is not in good shape at the moment.
The news comes just a day after the company moved to calmfears over its ability to remain a going concern.
JES reported a huge loss for 2013 and auditors have pointedout that its liabilities currently far outweigh its assets.
The company plans to take control of a 20% share in SCIBOIS bythe end of May that will give it the first option on the target’s logistics andports businesses.
It then aims to complete the acquisition of the remaining 31% holding by15 July, it added.
