China: Xiangyu Dredging Acquires Equity Interest in Jiangsu Jiaolong Salvage
Xiangyu Dredging Holdings Limited, the largest privately owned dredging company in China in terms of dredging volume in 2010, has announced the Company and its subsidiaries will acquire equity interest in Jiangsu Jiaolong Salvage Harbour Engineering Co. Ltd on 19 September 2011.
The Group will purchase an aggregate of 11% equity interest (before enlargement of registered capital pursuant to the subscription agreement) in Jiangsu Jiaolong Salvage at a purchase price of RMB27.5 million and subscribe for new equity capital in Jiangsu Jiaolong Salvage with a face value of RMB32,698,776 at the subscription price of RMB100 million. Immediately after the completion of the above, the Group will be interested in 51% of the enlarged registered capital of Jiangsu Jiaolong Salvage.
Jiangsu Jiaolong Salvage is principally engaged in the business of salvaging sunk objects and contractor of provision of engineering services for ports and channels. It’s certified with Class I salvaging qualifications for inland rivers and Class II salvaging qualifications for coastal waters awarded by the Diving and Salvaging Management Committee of the Ministry of Communications and Class II sub-contractor engineering qualifications for port and waterways by Construction Engineering Administration of Jiangsu Province. It was also recognized as one of the leading enterprises among domestic peers (excluding national professional salvage teams) in China by China Diving and Salvage Industry Association.
Jiangsu Jiaolong Salvage’s original equity-holders have agreed to give certain profit guarantees in favour of the Group and, in the meanwhile, the Group shall share 55% of the profits of Jiangsu Jiaolong Salvage up to 31 December 2014. Jangsu Jiaolong Salvage’s original equity-holders and the Group also agreed to provide shareholders’ loans to Jiangsu Jiaolong Salvage according to their respective equity holdings (after completion of the subscription) as working capital for the construction of a self-propelled floating crane-craft under ‘2000T’ specification.
Mr. Liu Kaijin, Chief Executive Officer of Xiangyu Dredging, commented, “The acquisition would not only enable the Group to create synergy to our existing business, but also broadening the Group’s income stream as well as customers stream. We believe that the acquisition will benefit us in creating the best return for our shareholders.”
About Xiangyu Dredging
The Company is the largest privately owned dredging company in China in terms of dredging volume in 2010, according to the Frost & Sullivan Report. The Company is engaged in providing capital dredging, reclamation dredging, maintenance dredging and environmental protection dredging services. The Company has cultivated strong client relationships and has a strong project pipeline including large-scale projects with prestigious clientele. The Company has strong ability to evaluate project profitability and selectively engage in profitable projects, and have undertaken contract work on dredging projects such as Caofeidian Industrial Area Project, Dalian Changxingdao Harbor Project and Tianjin Port Project. The Company achieved an average dredger working efficiency rate of approximately 83% in 2010, which was higher than the industry average of 70% in China.
Source: xiangyu, September 20, 2011;