China’s Dongfang Shipbuilding Works Through Finance Issues, Work put on Hold at DFS
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LONDON (Dow Jones)–Dongfang Shipbuilding Group Company Ltd (DFS.LN), said Monday that the company’s 49%-owned shipbuilding associate, DFS Shipbuilding, continues to have discussions with its banks and the local provincial authorities in Yueqing to secure the relevant finance and guarantees for the execution of contracts to allow commencement of work on shipbuilding orders.
-To date, there has been no conclusive outcome to these discussions and, as a result, DFS Shipbuilding has not been able to increase its order book or reduce its bank debts.
-Directors are reviewing various restructuring options to maximize shareholder value.
-Directors are considering the level of the fair value provision to be made against the company’s equity investment of GBP9.1 million in DFS Shipbuilding given the lack of any short term prospect of any improvement in the adverse trading conditions being experienced, and the fact that certain bank loan repayments due by DFS Shipbuilding have become overdue.
-The company is undertaking with its auditors a review of the Contractual Arrangements to establish which, if any, it may be beneficial to vary or terminate to avoid the Company consolidating DFS Shipbuilding’s accounts and to prevent any perceived negative association with DFS Shipbuilding’s liabilities.
-The restructuring review includes options to focus the Group’s business on its shipping operations based in Singapore and Hong Kong.
-Dongfang Shipbuilding Group shares closed Monday at 26 pence, valuing the company at GBP50.64 million.
-By Razak Musah Baba, Dow Jones Newswires
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