SembCorp Marine Injects Capital into Cosco Shipyard
SembCorp Marine signed an agreement to increase the registered capital of its associated company, Cosco Shipyard Group (CSG) by RMB 750,000,000 from RMB 598,776,205.26 to RMB 1,348,776,205.26. The increase is subject to the People's Republic of China's regulatory approval.
SembCorp Marine holds a 30 percent equity stake in the Cosco Shipyard Group in China. In accordance with the agreement, SembCorp Marine shall contribute 30 percent of the increased capital amounting to RMB 225,000,000. This capital injection into the registered capital of CSG shall be made progressively over a two-year period starting 2006 to 2007, payable in three installments.
The Cosco Shipyard Group is a leading ship repair and conversion group in China. It owns a total of five shipyards strategically located in the key coastal cities stretching from Dalian in the North, Nantong, Shanghai and Zhoushan in the centre and Guangzhou in the south. These shipyards provide ship owners with an effective network of marine engineering services across the entire length of China's coast. The injection of capital into the Cosco Shipyard Group is in line with SembCorp Marine's strategy to grow its China Hub and to participate in the growing ship repair and ship conversion market in China.
Based on the prevailing exchange rate quoted by DBS Bank Singapore, the total capital injection into CSG over the next two years is estimated at S$45.4 million. This amount shall be funded by dividend income from CSG and the company's internally generated funds.
The above transaction is not expected to have any material effect on SembCorp Marine's earnings per share and net tangible asset per share for the year ending December 31, 2006.
None of the directors or substantial shareholders of the Company has any interest, directly or indirectly in the above transaction.
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