Guangzhou Shipyard International Co. Ltd. (GSI) (00317.HK) gained support on Wednesday after it resumed trading. The mid-sized shipbuilder proposed raising HK$2.82 billion (US$362 million) through a non-public share offering to buy Guangzhou Longxue Shipbuilding Co. from parent firm China State Shipbuilding Corp.
The counter was quoted 1 percent above the closing before the shares were suspended.
Longxue is one of the China’s big-three vessel manufacturers. The acquisition will enable GSI to move up the value chain by obtaining the capacity for the first time to build very large crude carriers of over 300,000 deadweight tons. At present, GSI is largely confined to building ships of up to 60,000 dwt.
Although Longxue is still losing money, China State Shipbuilding Corp has assured GSI that the shipyard will turn around next year. If not, it will compensate its Hong Kong-listed subsidiary.
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