HONG KONG, Dec 12, 2015 - (ACN Newswire) - China COSCO Holdings Company Limited ("China COSCO", stock code on Shanghai Stock Exchange: 601919; stock code on Hong Kong Stock Exchange: 01919), China Shipping Development Co., Ltd. ("China Shipping Development", stock code on Shanghai Stock Exchange: 600026; stock code on Hong Kong Stock Exchange: 01138), China Shipping Container Lines Co., Ltd. ("China Shipping Container Lines", stock code on Shanghai Stock Exchange: 601866; stock code on Hong Kong Stock Exchange: 02866), COSCO Pacific Limited ("COSCO Pacific", stock code on Hong Kong Stock Exchange: 01199) simultaneously issue announcements on 11 December 2015 to state the execution of a series of asset restructuring transaction and service agreements.
Transaction Overview
- China COSCO proposes to lease and operate container vessels and containers owned or operated by China Shipping Container Lines; to acquire shares of 33 agency companies from China Shipping Container Lines for a consideration of approximately RMB1.14 billion (subject to adjustment); to dispose of its dry bulk shipping business to COSCO for a consideration of approximately RMB6.77 billion (subject to adjustment). Upon completion of the transactions, China COSCO will become a listed platform specializing in container shipping services.
- COSCO Pacific proposes to acquire China Shipping Ports Development Co., Ltd., held by China Shipping (H.K.) Holdings Company Co. Ltd. and China Shipping Container Lines for an initial consideration of RMB7.63 billion (subject to adjustment); dispose of Florens container leasing business to China Shipping Container Lines for an initial consideration of RMB7.78 billion (subject to adjustment). Upon completion of the transactions, COSCO Pacific will become a listed platform focusing on developing global port business.
- China Shipping Container Lines proposes to; lease its container vessels and all containers to COSCON (COSCO Container Lines Co., Ltd.); dispose of certain assets in its container business to China COSCO and China Shipping; acquire lease and financial assets/equity interests of COSCO and China Shipping; dispose of 49% equity interests of China Shipping Ports . Upon completion of the transactions, China Shipping Container Lines will become a comprehensive listed platform specialized in shipping and financial services.
- China Shipping Development proposes to acquire 100% equity interests of Dalian Ocean Shipping Company from COSCO and to dispose 00% equity interests of China Shipping Bulk Carrier Co., Limited to COSCO and/or its wholly-owned subsidiaries upon the completion of the internal restructuring of China Shipping bulk shipping assets. Upon completion of the transactions, China Shipping Development will become a listed platform operating in the oil and gas shipping industry specialized in oil shipping business and LNG shipping business.
By leasing and operating container vessels and containers of China Shipping Container Lines, acquiring China Shipping Container Lines' agency companies and disposing of its dry bulk business, China COSCO will become a listed platform specializing in containers shipping services. By acquiring China Shipping Ports and disposing of Florens' container leasing business, COSCO Pacific will become a listed platform focusing on developing global port business. Upon completion of the transactions, China COSCO will become the fourth largest liner transportation company in the world with container shipping chain as its core services, and the second largest port operator globally in terms of total throughput. The capacity and scale of the container shipping and the coverage of trade lanes will be increased; fleets and containers structure is expected to be overall optimized; the layout of the port network will be expanded and operating efficiency will be highly improved. The synergies between its container shipping business and port business will be significantly enhanced.
By leasing container vessels and containers, disposing of the equity interests in companies in the ancillary container shipping business to China COSCO and disposing of the ancillary businesses and the equity interests of China Shipping Ports, and acquiring leasing and financial assets of COSCO and China Shipping to become the platform of financial and shipping services, China Shipping Container Lines is committed to becoming a shipping and financial service business provider with leasing as its core business, principally engaged in the diversified leasing business including vessel leasing, container leasing and non-shipping finance leasing. Upon completion of the transactions, the scale of its container leasing business will rank third globally.
By acquiring Dalian Ocean and disposing of China Shipping Bulk upon the completion of the internal restructuring of China Shipping bulk shipping assets, China Shipping Development will become a listed platform focusing on oil and gas shipping business and LNG shipping business. Upon the completion of the proposed transactions, China Shipping Development will rank the first in terms of its tanker fleet capacities and the second in terms of its VLCC fleet capacities globally.
Meanwhile, the boards of China COSCO, China Shipping Container Lines and China Shipping Development separately authorized managements to explore equity incentive plans. China COSCO and China Shipping Container Lines also announced plans to increase shareholding by their respective controlling shareholder.
Owing to the deep adjustment and slow recovery of the global economy in recent years, the international shipping market is experiencing an overall downturn under the increasingly fierce competition environment. Facing huge operating pressure, shipping enterprises around the world strive to make innovations and changes in terms of forming alliance, mergers and acquisitions, asset restructuring, cooperation between the industrial and financial sectors and the application of new technologies, etc. in order to strengthen the enterprises' capabilities of risk resistance and sustainable development. There is a trend in the international shipping and shipping-related industries featured by professional and alliance development, thus, the market concentration rate increases further. Meanwhile, with China's economy experiencing transformation and upgrade, the Chinese government is paying more attention to the quality of the country's GDP growth and operating efficiency of enterprises in the "Thirteenth Five-year Plan". The Chinese government recently published the Guiding Opinions on Deepening State-Owned Enterprises Reform, which further specified the development direction of SOE reform in the PRC.
Against this background, in line with the global economy and industry development and grasp the opportunities of the "One Belt, One Road" initiative in line with the trend of national strategy of establishment of economic power, COSCO and China Shipping, with an aim to strengthen business development capacity and promote international operating level and sustainable development, propose to carry out an asset restructuring in their respective container shipping, dry bulk shipping, tanker market, port and shipping finance businesses. By combining power of supply and demand and optimizing resources allocation, not only the shipping demand is increased but also the supply is increased. COSCO and China Shipping aim to improve enterprises' comprehensive strength and competitiveness in the world, strengthening economies of scale and synergies effect.
Through the restructuring and consolidation, COSCO and China Shipping will build a comprehensive development platform with four professional clusters relying on shipping industry with container shipping services, ports and harbors, oil and gas shipping and shipping and financial services to improve the position of the Chinese shipping enterprises in the international shipping industry and strengthen international competitiveness, which are beneficial to the increase in resources utilization rate of the shipping industry and reduction in logistic costs of the whole economy, enable transformation and upgrade of the logistic industry, and therefore, promoting the foreign trade of our country, opening up external trade and strategic passage and providing support and guarantee to the construction of 21st-Century Maritime Silk Road of the PRC.
China COSCO: building an offshore maritime silk road for the 21st century and establishing a listed platform of containers shipping services in the world
Through the restructuring, China COSCO will become a listed platform of containers shipping services. COSCO Pacific, a subsidiary of China COSCO, will become a platform of the development of global terminal business. Upon completion of the restructuring, China COSCO will become the fourth largest liner transportation company in the world with container shipping chain as its core services, and the second largest terminal operator globally in terms of total throughput.
Through the restructuring, China COSCO will integrate its resources to shift its focus to the development of container transportation and terminal businesses, which will fully capture the historic opportunity of the transformation in the international shipping market, develop synergies effect of its businesses, optimize global layout of route network, improve the construction of the international transshipment hub, increase global market shares, carry out reasonable resource deployment and facilitate the growth of business scale.
Upon completion of the restructuring, the size of China COSCO's containership fleet will amount to 288 vessels with 1.583 million TEUs, accounting for 8.0% to the global shipping capacity. With the size of its fleet substantially expanded, the structure of its fleet further optimized and global network completely upgraded, its business volume will obviously increase. Moreover, complementary advantages are seen in business development, which will substantially reduce operating costs while enhance operational efficiency and hence will increase the profitability of the container shipping business in an efficient manner. Regarding terminal business, the number of container terminals operated by COSCO Pacific, one of its subsidiaries, will reach 39, with a geographical network covering the five major ports in the PRC and the trans-shipment hubs overseas, which will form a full coverage along the coastal provinces in the PRC and lead to a strengthened business development of coastal terminals under "One Belt, One Road", further expanded layout of overseas terminals, more balanced deployment of assets, and finally a boost of competitive strength. Meanwhile, the new container business segment and terminal business segment will also fully develop the synergies effect of containers transportation business and terminal business, which will efficiently improve the stability of the business, strengthen the anti-cyclical capability and increase the profitability of the Company.
Moving forward, China COSCO will closely work on the four dimensions of "increasing profitability, improving the stability and anti-cyclical capability of business, strengthening the establishment of worldwide network and promoting the expansion of business scale, ", fully capture the opportunities arising in the shipping market, further develop the synergies effect of businesses and improve the anti-risk capability and the ability of sustainable development so as to provide its clients with broader range of high value-added services and create greater value for clients, business partners and investors, in turn securing a sound and sustainable development for the Company and maximizing shareholders' return. Regarding its container shipping business, China COSCO will continue to optimize its fleets and route layout, continuously improve its overall business and marketing capability, further optimize sources of goods and client base and progressively identify development potentials and growth drivers in emerging markets and regional markets. In addition, there will be the promotion of cross-boundary cooperation between traditional industry and e-commerce, the strengthening of business innovation and addition of service and product varieties, the development of alliance advantages, continuous promotion of strategies for international development and complete optimization of operating costs, all of the above substantially improve the comprehensive competitiveness of the fleet. Regarding terminal business, China COSCO will devote itself to developing the synergistic effect of its container transportation business in terms of investment and operation, accelerate the layout progress for its overseas network points, strengthen the establishment of trans-shipment hubs and increase the shareholding of terminals.
COSCO Pacific: Capturing the opportunities for development under "One Belt, One Road" and establishing a listed platform of terminal business in the world
In recent years, the global port and terminal industry has maintained moderate growth. However, there is intensified competition in the global port and terminal industry as there is a slowdown in the recovery of the global economy. In order to timely capture the historic opportunities of the economic globalization, transformation of the PRC economy and "One Belt, One Road" and better benefit from the development potential of the industry and investment opportunities arising over the world, COSCO Pacific proposes to carry out asset restructuring for its terminal business and container leasing business. Through this restructuring, COSCO Pacific will dispose of its 100% equity interests in Florens to the China Shipping Group and acquire t100% equity interests in China Shipping Ports from the China Shipping Group, eventually becoming a listed platform focusing on developing global port business.
The restructuring, carried out by COSCO Pacific in response to the development trend of the industry, is an important move to capture the historic opportunities to the strategic implementation under "One Belt, One Road". Upon completion of the restructuring, the terminal network of COSCO Pacific will be remarkably expanded, with 39 operating terminals by control in shareholding and equity participation and 172 berths worldwide. The terminal network covers the five major ports of the PRC and overseas trans-shipment hubs, which will form a full coverage of coastal provinces in the PRC. In addition, there is further expansion of overseas terminals and more balanced asset deployment as a result of the restructuring, which will greatly increase competitive strengths. Using container throughput as the indicator, upon the completion of the acquisition, COSCO Pacific will become the second largest terminal operator across the globe in terms of total throughput and will emerge as an even more influential leader in port operation in the world as well.
COSCO Pacific will continue to carry through four strategic focal points to achieve a balanced development and enhance its comprehensive strengths: following the trend of larger boats, exerting the strength to take opportunities of hub ports development, optimizing the operating mode of piers, struggling to improve the brand value of COSCO Pacific, creating investment path for equity participation of piers, endeavoring to enhance the profitability of the pier segments, seizing the strategic opportunities brought by "One Belt, One Road" and Yangtze River Economic Belt to strive for advancement of globalized layout of piers. In the meantime, COSCO Pacific will strengthen its synergistic effects with parent companies, consolidate the stability of sources of goods and increase opportunities for obtaining new projects by relying on the fleet of parent companies and the layouts of global ship routes, as well as putting effort on developing and optimizing the construction of global container transshipment hubs.
China Shipping Container Lines: taking advantages of the cooperation between the industrial and financial sectors and creating a comprehensive listed platform of shipping and financial services
By leasing container vessels and containers and disposing of the equity interests in companies engaging in ancillary container shipping business and the equity interests of China Shipping Ports under the restructuring, as well as acquiring Florens Container Co., Ltd., a subsidiary of COSCO Pacific, and injecting capital into shipping and financial companies under COSCO Group and China Shipping Group, China Shipping Container Lines will transform into a comprehensive platform of specialized in shipping and financial services from the originally container shipping business platform and become a professional listed platform of comprehensive shipping financial service business with diversified leasing as its principal businesses including vessel leasing, container leasing and non-shipping finance leasing. Upon completion of the transaction, the scale of its container leasing business will rank third across the globe.
China Shipping Container Lines operates its business with a model combining "shipping + finance" under cooperation between the industrial and financial sectors and gives full play to the synergistic effect of various sections of the financial business, providing core leasing business and the Group's development of the core shipping business with funds and huge revenue, while making equity investment through its own advantages, so as to make strategic equity investment timely in the middle- and long-term and strengthen the cooperation between the industrial and financial sectors.
For the leasing business, to grasp the opportunities of acceleration in developing financing leasing and finance leasing businesses in the PRC, China Shipping Container Lines will develop into a world-leading container leasing company with the orientation of "stabilizing core business, grasping market opportunities" through consolidation to achieve the synergies of sales, costs and capacity, further stabilize its core business and grasp market opportunities, improve special its container leasing business, optimize its contractual position and improve its finance structure to promote the rate of return. Moreover, the company will treat the vessel finance leasing business as its core of development and current leasing company as the subjects of its business based on the its current shipping business. By fully deploying the existing fleet resources, gradually increasing the proportion of external business, utilizing the advantages of the whole industrial chain layout of the group and designing "one-stop" business model, China Shipping Container Lines will activate its internal business volume and develops unique competitive edges in the industry. Non-shipping leasing business company will target at SME's customers, promote the cooperation between industrial and financial sectors with its current business, experience and capital, creating a leading enterprise of ports, logistic and SME's customers market financing leasing. For the industrial sector, China Shipping Container Lines will support the customer-orientated demands and provide finance lease value-added services, thus building a professional and unified platform of finance lease business.
For the investment business, the company will be principally engaged in equity investment and intra-group financial services. The new company will make better use of various strategic and finance investment opportunities and improve investment return and, as well as lifting the asset liquidity and diversifying related risks in the shipping sector in accordance with development trend and the national strategies of "One Belt, One Road" and "Made in China 2025".
For the comprehensive finance business, upon completion of the transaction, the company will continue to seek appropriate opportunities, expand investments in the financial sector, and speed up the growth in asset scale and income level so as to lay the foundation for a comprehensive financial platform.
By leveraging deep understanding and extensive experience of the shipping industry accumulated for a long period of time, the new China Shipping Container Lines will grasp market opportunities globally and strengthen the cooperation with other shipping enterprises in order to provide operating lease services, as well as superior services such as management and maintenance of crew/vessels and logistic network, building world-leading vessel and container leasing business with unique competitiveness. In addition, new China Shipping Container Lines will also proactively conduct external cooperation and steadily expand the proportion of external business, laying a solid customer foundation for exploring business sectors. Additionally, new China Shipping Container Lines will collect funds of lower cost via financing channels.
China Shipping Development: Serving the national energy strategies, building into a listed platform of professional oil and gas transportation
By disposing of its dry bulk shipping business to COSCO and acquiring 100% equity interests of Dalian Ocean which is engaged in the oil shipping business and LNG shipping business, China Shipping Development will become a listed platform of professional oil and gas transportation specialized in oil shipping business and LNG shipping business. Upon the completion of the restructuring, China Shipping Development will rank the first in terms of its tanker fleet capacities and the second in terms of its VLCC fleet capacities globally.
There has been an oversupply in the global crude oil market and the international crude oil price remains at a low level since 2014. Under the circumstances of low oil price and the needs for energy safety, the demand for crude oil stock continues to increase and the development of the international oil shipping market is promising in the future. It is the best time for China Shipping Development to consolidate its oil shipping business resources of the two groups. Upon the completion of the restructuring, by leveraging a large energy transportation fleet of a globally leading position and the global operating network, China Shipping Development will expand its global layout and increase its comprehensive competitive strength, realizing "four globalization" in terms of resources, customers, lanes and network, thus effectively grasping the development opportunities of the oil and gas shipping market. Meanwhile, through the restructuring, a strong alliance between the two LNG shipping companies can be achieved, strengthening the leading position of the company in the world's LNG shipping industry, bringing the company with long-term stable revenue and effectively countering the cyclical fluctuations in the oil shipping market. The company will also dispose of its dry bulk shipping business in order to concentrate its principal business. Therefore, the sustainable profitability of the company will be improved.
Upon the completion of the restructuring, by taking full advantages of resources and technologies of the oil and gas shipping sector established by both parties, China Shipping Development will further strengthen and expand its market share in China's importing oil shipping market. Based on the guarantee for the safety of the national energy transportation, China Shipping Development will implement the global network layout of sources of goods and deepen the strategic cooperation with other domestic oil enterprises. It will also actively participate in the competition of the international oil and gas shipping projects on the premise of securing stable revenues and controlling investment risks, to further expand business scale, increase its market share in China's importing oil shipping market, enhance its international competitiveness, thereby further promoting its overall efficiency of the company and building into a world-leading energy transportation enterprise.
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