A restructuring proposal for bankrupt Zhejiang Shipbuilding aims to put the facility in the hands of major Chinese real-estate developer Evergrande Real Estate Group, in a move that would represent a rare deletion of physical capacity from the Chinese shipbuilding market.
Zhejiang, the sister yard of Yangzhou Dayang in the former Sinopacific Shipbuilding Group, would be the third and last of the yards associated with shipbuilding entrepreneur Simon Liang to come under new ownership — but the first to disappear as a shipyard.
The yard was best known for its offshore support vessels but has also built supramax and ultramax bulkers as well as small tankers. It filed for bankruptcy protection in April 2016 and, like its affiliated yards since then, has operated on a limited basis to complete some projects already underway.
Funds for Zhejiang Shipbuilding's operations have come from local contractor Zhejiang Huiji Ship Engineering. It is said to have agreed to provide up to CNY 2.4bn ($351m) to complete projects in which it was involved, but to have declined to make a bid to take over and restructure the yard.
However, according to documents viewed by Chinese shipping and shipbuilding news channel imarine.cn (or Longchuan), a proposal before Zhejiang's bankruptcy administrator calls for a company called Shanghai Yingjun Investment Management to inject CNY 1.501bn in exchange for 100% equity.
That would be a substantial contribution towards setting creditors' claims, which amount to CNY 6.517bn, of which CNY 3.178bn has been recognised by the administrator. Documents cited by imarine.com put the liquidation of the yard's assets at around CNY 953m as of the end of April.
Shanghai Yingjun is a subsidiary of Guangdong province-based Evergrande.
Evergrande, a Hong Kong-listed luxury apartment building specialist, is a powerful player, described by sources as the second-largest real-estate developer in China, with a market capitalisation of CNY 370bn.
First outing
In 2016, chairman Xu Jiayin (Hui Ka Yan) was listed in eighth position on a Chinese rich list, with Alibaba founder Jack Ma said to hold a minority stake.
It would not be Evergrande's first outing as a buyer and redeveloper of shipyards. In 2016, the company took over the former Guangdong Jiangmen site, which like Zhejiang was an OSV specialist fallen on hard markets.
Meanwhile, the other two facilities formerly controlled by Liang — supramax builder Yangzhou Dayang Shipyard and Sinopacific Offshore & Engineering — are in operation again, both under the control of Chinese state-owned manufacturing conglomerates.
Sumec, a subsidiary of state-owned industrial giant China National Machinery Industry Corp (Sinomach), is the sponsor of the restructured Dayang.
Cosco-linked China International Marine Containers (CIMC), through subsidiary CIMC Enric, has revived Sinopacific Offshore & Engineering under the name Nantong CIMC Sinopacific Offshore & Engineering as a gas module, ship and offshore yard.
Although sources list a large orderbook at the failed yard, documents cited in the Zhejiang restructuring mention only two offshore vessels ordered by Groupe Bourbon, which are to be delivered to the owner in their present state.
Groupe Bourbon and its parent company, Jacques de Chateauvieux-led Jaccar Holdings, were formerly partners with Liang in the Sinopacific yards as well as major customers of their products.
Evergrande could not be reached before TradeWinds went to press.
