Hudong to invest in shipyards and technology

Hudong Heavy Machinery in China plans to raise RMB 12 billion ($1.54 billion) from a share placement that it will use to fund its purchase of shipyards and to invest in new technologies.

With the proceeds, Hudong will buy 100% of Shanghai Waigaoqiao Shipbuilding Co. and CSSC Chengxi Shipyards and 54% of Guangzhou Wenchong Shipyard. It will also invest in technology upgrades.

The company, which is the biggest maker of marine diesel engines in China, will sell up to 400 million A-shares at RMB 30 per share in exchange for RMB 9 billion in assets and RMB 3 billion in cash, it said in a statement to the Shanghai Stock Exchange. Hudong?s controlling shareholder, China State Shipbuilding Corp., will buy 59% of the share issue. The other buyers include Baosteel Group Corp., China Life Insurance Co., Shanghai Electric Group Corp. and CITIC Group.

If the acquired assets are included, Hudong Heavy’s net assets will be increased to RMB 13.2 billion from RMB 1.2 billion at the end of 2006. Its net profit is forecast to expand to RMB 1.5 billion from the RMB 250 million.