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SembMarine to sell 30% stake in Cosco Shipyard for 1.06b yuan

SEMBCORP Marine (SembMarine) is planning to sell its 30 per cent stake in Cosco Shipyard Group (CSG) for 1.06 billion yuan (S$220.68 million).

In a Singapore Exchange filing on Tuesday, the group said it has entered into a sale-and-purchase agreement with China Ocean Shipping (Group) Company on the sale as the investment is no longer strategic nor a core asset of the group.

CSG, a ship repair, conversion and shipbuilding group, owns six major shipyards in China. These are located in key coastal areas stretching from Dalian in the north, Nantong, Shanghai, Qidong and Zhoushan in the centre to Guangzhou in the south.

After deducting capital gains tax and realising foreign currency translation reserves, the net proceeds will represent a gain of about S$48.32 million over the S$180.10 million that SembMarine has valued the investment on its books. SembMarine will use the net proceeds for working capital.

SembMarine announced the acquisition of the 30 per cent stake in CSG in 2004. Following the transaction, it will not have any interest in CSG except through its 4.98 per cent shareholding in Cosco Corporation (Singapore), which has a 51 per cent equity stake in CSG.

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The deal is conditional upon approvals by the relevant Chinese regulatory authorities, internal approvals and the issuance of a new Foreign-Investment Enterprise on or before Dec 31.

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