Media Reports

    Upstream——CIMC Offshore gets $145m cash injection  date:2016-12-09

    The Hong Kong-listed unit of China International Marine Containers Group, CIMC Offshore, will sell a 15% equity stake to China-based Future Industry Investment Fund for about US$145 million.

    CIMC Offshore will use proceeds from the sale for expansion, research & development, production and capital expenditures. It may also put some of it towards general working capital, but will not be used in "investment or holding financial assets including shares", according to a securities filing.

    CIMC Offshore manufactures, designs, builds and maintains semi-submersible drilling platforms and crane platforms, jack-up rigs and accommodation units, liftboats, floating production storage vessels, crane vessels, pipe-laying vessels, offshore supply vessels and other vessels.

    The company is owned 100% by listed entity CIMC HK, which will waive its pre-emption right and retain an 85% stake in CIMC Offshore, an indirect subsidiary of the group.

    Future Industry will make lump-sum $145 million payment in cash, in US dollars, equivalent to 1 billion Chinese yuan.

    "The consideration was determined after arm’s length negotiations among the parties with reference to, among other things, the industrial advantages, the prospects and the net asset value of semi-submersible offshore platform manufacturing operations of CIMC Offshore... and the average prevailing valuation in the domestic offshore engineering industry," the group said.

    CIMC HK recently completed a US$240 million loan capitalisation with CIMC Offshore. Including that loan, CIMC Offshore has net assets amounting to about HK$2.3 billion, or around US$293 million.

    The deal marks Future Industry's first investment in a marine equipment enterprise.

    It will be "beneficial to the research, design and construction of high-end offshore equipment of the offshore operation of the group and will facilitate the localisation of major equipment manufacturing to achieve new breakthroughs", according to the filing.

    State-run Future Industry applies central Chinese government funds to absorb social capital investment and focuses on investment in major projects in the advanced manufacturing industry.