Cosco Shipping Energy Transportation, part of state conglomerate China Cosco Shipping, has announced its plan to absorb one of its main shipowning subsidiaries.
In an exchange filing, CSET said its board approved the merger of Cosco Shipping Tanker (Shanghai), also known as Shanghai Tanker, as part of intra-group restructuring.
The absorption is “for the integration of the core businesses of the group and is conducive to optimising the management structure and enhancing the operation and management efficiency,” Shanghai- and Hong Kong-listed CSET said.
Shanghai Tanker owned 49 oil tankers totalling 4.73m dwt as of the end of 2019. The wholly owned subsidiary recorded a net profit of CNY 573m ($80.7m) on revenue of CNY 4.16bn last year.
According to CSET, the merger will not cost any money and is not to result in any material impact on its financial performance.
Upon completion of the absorption, pending approval from shareholders, Shanghai Tanker will cease to exist as a legal entity.
The tanker giant’s move came after Cosco Shipping Tanker (Dalian), another of its main subsidiaries, was put on Washington’s sanctions list between 25 September and 31 January for allegedly transporting Iranian oil.
The US sanctions had taken Cosco Dalian's fleet of 42 tankers, including 26 VLCCs, out of international trading. Operations of China LNG Shipping, a 50:50 joint venture between CSET and China Merchants Energy Shipping, were also affected for some time.
On a group level, CSET posted net profits of CNY 432m on revenue of CNY 12.3bn in 2019.
CSET said it will appoint five independent non-executive directors to its board as the same number of them retire.
The new appointees include Zhang Qinghai and Liu Zhusheng, two veterans who have worked at Cosco affiliates.
Others are Victor Huang, a member of the Hong Kong Institute of Certified Public Accountants; Li Runsheng, who sits on the board of China Aviation Oil; and Shandong Lihuayi Weiyuan Chemical, and Zhao Jinsong, a lawyer and a maritime arbitrator.
Those who plan to step down are Feng Boming, Zhang Wei, Lin Honghua, Ruan Yongping and Ip Sing Chi.
