The Straits Times / The Business Times News on Cosco

Cosco S'pore bags contracts worth US$338m

The orders are for 10 bulk carriers of 57,000 dead weight tonnes each

(SINGAPORE) Cosco Corp (Singapore) announced yesterday that the group has won building contracts worth US$338 million.

The contracts were won by Cosco (Zhoushan) Shipyard Co Ltd, a wholly owned subsidiary of Cosco Shipyard (Group) Co Ltd, which is a 51 per cent-owned subsidiary of Cosco Singapore.

The orders - for 10 bulk carriers of 57,000 dead weight tonnes each - were secured from Qingdao Ocean Shipping Co and Cosco Bulk Carrier Co Ltd as well as other subsidiaries of China Ocean Shipping (Group) Company, the controlling shareholder of Cosco Singapore.

'The value of each of the contracts was arrived at on an arm's length basis,' Cosco Singapore said.

Cosco Singapore had earlier said that the establishment of Cosco Zhoushan was to enable the group to further grow and become a significant shipyard operation as well as to further expand its marine engineering capacity and capabilities to take advantage of the booming offshore marine industry. 'The entry of the contracts is a further development in that direction,' it said.

Under the terms of the contracts, payment of the purchase price of each bulk carrier will be made by the buyer of the vessels in one instalment of 25 per cent, three instalments of 20 per cent each and another instalment of 15 per cent upon the occurrence of certain milestones in the building and delivery process.

The company said the contracts are regarded as interested person transactions under Singapore listing rules and will become effective only upon the approval of its shareholders.

The contracts are not expected to have any material impact on the earnings of the company for the financial year ending Dec 31, 2007, Cosco Singapore said.

It added that for the current financial year so far, the value of all transactions - excluding the latest contracts - entered into between the company and China Ocean Shipping stands at $39.7 million.

These transactions fall within the interested person transaction mandate which was renewed at Cosco Singapore's last annual general meeting held this month.