The Straits Times / The Business Times News on Cosco

Cosco unit bags orders worth US$1.2b

COSCO Corporation yesterday said its unit Cosco (Zhoushan) Shipyard Co Ltd has secured shipbuilding contracts worth a total of US$1.2 billion.

Cosco Zhoushan is a wholly owned subsidiary of Cosco Shipyard (Group) Co Ltd, which is a 51 per cent subsidiary of Cosco Corporation.

About US$669 million worth of Cosco Zhoushan's new contracts come from Cosco International Ship Trading and its nominees.

They are building contracts for 12 bulk carriers of 57,000 dead weight tonnes each and four pure car and truck carriers of 5,000 units each.

The contracts are to be delivered between December 2008 and October 2009.

The buyer of each bulk carrier will pay in five equal instalments of 20 per cent each 'upon the occurrence of certain milestones in the building and delivery process', said Cosco Corporation yesterday in a statement to the SGX.

Cosco International and its nominees are all subsidiaries of China Ocean Shipping (Group) Company, which is the controlling shareholder of Cosco Corporation. As such, the contracts are regarded as interested person transactions. They need the approval of shareholders as the consideration, amounting to about 155 per cent of the company's net tangible assets, exceeds the financial threshold of 5 per cent. The Audit Committee will be obtaining an opinion from an independent financial adviser on the contracts before forming its view, said Cosco Corporation.

The second batch of orders worth a total US$525 million are building contracts for 14 bulk carriers of 57,000 dead weight tonnes each from shipowners in Turkey, Portugal, Greece and India.

These are to be delivered between August 2008 and March 2010.

Cosco Corporation said the value of each contract, including those offered by Cosco International, was arrived at on an arm's length basis.

The Cosco group has previously announced that it will expand its shipyard operations and the contracts represent another step in that direction, said Cosco Corporation.