A CSIC-built advanced missile destroyer. Image credit CSCI
By Bloomberg News
Sept. 10 (Bloomberg) — China Shipbuilding Industry Co., a supplier to the Chinese army, plans to raise as much as 8.48 billion yuan ($1.4 billion) from the sale of shares to acquire assets used to assemble military equipment and fund projects.
The company will offer as many as 2.2 billion shares in a private placement for at least 3.84 yuan each, it said in a statement to the Shanghai Stock Exchange today. It will buy assets, including some from its parent, according to the filing.
China Shipbuilding is a major supplier of ships and equipment to the Chinese navy, responsible for at least 80 percent of naval production, including the assembly of equipment including surface and underwater vessels, torpedoes, mines. China’s demand for marine civil-enforcement vessels will reach as much as 50 billion yuan in the coming years, the company said today, citing its internal research.
“There is still a big gap in China’s maritime defense capabilities compared with other naval powers, especially in the area of aircraft carrier battle groups,” China Shipbuilding said in the statement.
The shares will be sold to related companies including Dalian Shipbuilding Industry Co. and Wuchang Shipbuilding Industry Co., securities and trust companies, insurance institutional investors and qualified foreign institutional investors, according to the statement.
The company participated in the construction of China’s first aircraft carrier, built using the hull of an unfinished Soviet-era ship and named the Liaoning, which was commissioned September last year.
“In the next five to 10 years, China is very likely to further construct one or many more locally made aircraft carriers as well as their accompanying battle groups,” China Shipbuilding said.
China Rongsheng Heavy Industries Group Holdings Ltd., the country’s largest shipyard outside state control, is seeking government assistance after a slump in vessel orders. It’s pursuing alternative sources of funding after burning through cash and posting a second straight loss. China announced its support for the industry as a third of its shipyards may shut down in about five years amid a global vessel glut.
Copyright 2013 Bloomberg.
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