China Rongsheng Heavy Industries Group Holdings Limited, one of the country’s biggest private shipbuilders, announced it has changed its corporate name to China Huarong Energy Company Limited. A company official said of the decision, ”We now look to our growth as an enterprise devoted to the development and production of oil and natural gas.” On April 24, it registered the change at the Hong Kong Stock Exchange where it is listed. Its stock code remains unchanged with 01101.
Rongsheng had rapidly grown since its foundation in 2005 under its strategy to take newbuilding orders while pushing construction of its yard facilities. Only six months after the completion of its first vessel in the summer of 2008, it accepted an order for serial construction of a 400,000-dwt very large ore carrier (VLOC), claimed to be the world’s biggest model at the time. It became one of China’s biggest shipbuilders by completing three large-size docks in 2009. It had its stock listed on the Hong Kong Stock Exchange and Singapore Exchange in subsequent years. It has an offshore-related subsidiary in Singapore.
Rongsheng has its facilities at a 7 million-sqm site with a total quay length of 3.7 km. It has four docks, No. 1 (465 x 102 meters), No. 2 (530 x 102), No. 3 (530 x 106) and No. 4 (580 x 139.5). The first three, each equipped with two 900-ton cranes, are for construction of merchant ship newbuildings and the fourth, equipped with a 1,600-ton crane, one of the world’s biggest, and a 600-ton crane, is for construction of offshore structures. The other facilities include a 210,000-sqm block plant, a 37,000-sqm piping center and a 118,000-sqm painting center.
Rongsheng’s cash flow deteriorated after the summer of 2013 following a spate of delivery postponements caused by delayed work schedules and refusal by shipowners to take delivery of their completed vessels. It used up the credit facilities provided by its banks, unable to get refund guarantees and letters of credit as scheduled. The last of the 16-unit series 400-type VLOCs was completed in January 2015 several years behind schedule.
In a bid to tide over its financial difficulties, the company repeatedly issued convertible debentures and sold its stocks to Hong Kong investors. It sought financial aid from the China State Shipbuilding Corp. (CSSC) and its subsidiary Shanghai Waigaoqiao Shipbuilding (SWS), but their talks seemed to have ruptured. A related source said, ”Rongsheng had narrowly run its yard since the summer of 2013. But its operation came to a temporary halt in 2014.”
Commenting on the change of its corporate name, a Rongsheng official said, ”We will look to expand and diversify our business domains to rebuild ourselves as an enterprise to develop, produce and run oil and gas fields. We will begin with the development of an oilfield in the Kirghiz Republic in which we have purchased an interest.” He said his company is pushing ahead with its voluntary reconstruction with the aid from its creditor banks, adding, ”We are now discussing an offer of capital contribution made by a Chinese enterprise.”
[Shanghai Bureau]
