Cosco Shipping International to sell 60% stake in Singapore unit for US$42.4 million

MAINBOARD-LISTED logistics management service provider Cosco Shipping International F83 : F83 0%on Thursday announced the proposed disposal of a 60 per cent stake in Cosco Shipping Singapore for US$42.4 million in an interested party transaction.

Cosco Shipping International is the beneficial owner of all the issued shares of Cosco Shipping Singapore, which is primarily engaged in the business of dry bulk shipping, with the main focus on the owning and chartering of vessels.

Cosco Shipping Singapore will be sold to Cosco (HK) Shipping, a wholly owned subsidiary of Cosco Shipping Bulk, which is, in turn, wholly owned by China Cosco Shipping Corporation.

China Cosco Shipping Corporation is an indirect controlling shareholder of Cosco Shipping International.

The company said the consideration was arrived at after arm's length negotiations on a willing-buyer and willing-seller basis, taking into account an independent valuation as at June 30.

In a bourse filing on Thursday, Cosco Shipping International said the proposed transaction represents its strategic decision to streamline its current conglomerate structure to increase focus on its core logistics business and to achieve better performance for the group's existing businesses.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

It added that its dry bulk shipping business under Cosco Shipping Singapore was curtailed by its limited marketing capabilities and lack of market competitiveness as it only has three vessels of the same ship type.

"The company believes that dry bulk shipping business is complementary to the group's core logistics business and ship repair and marine engineering services, but requires the necessary resources and scale to develop and expand further," it said.

Cosco Shipping International added that it will benefit from retaining the remaining 40 per cent stake in Cosco Shipping Singapore, while tapping on Cosco Shipping Bulk's global presence and fleet of more than 400 vessels to achieve sustainable development and growth.

The company said it intends to use the sale proceeds from the proposed partial disposal to expand and promote the development of the group's logistics business in South and South-east Asia, as well as for working capital requirements of the group.

Completion of the sale and purchase agreement will need to be approved by Cosco Shipping International's shareholders at a general meeting to be convened.

Shares of Cosco Shipping International closed half a Singapore cent or 1.8 per cent higher at 28 cents on Thursday, before the announcement.