rongsheng cease shipbuilding price

Last October, the company entered into an agreementto sell 98.5% equity interest of Rongsheng Heavy Industries, the entire interest in Rongsheng Engineering Machinery, Rongsheng Power Machinery and Rongsheng Marine Engineering Petroleum Services, to Unique Orient, an investment holding company owned by Wang Mingqing, a creditor of Huarong Energy, for a nominal price of HK$1.

Once the largest private shipyard in China, Rongsheng ceased shipbuilding operations in 2014 after it was hit by a major financial crisis and the shipyard rebranded into Huarong Energy in 2015.

Huarong Energy is of the view that the shipbuilding and engineering business is unlikely to see a turnaround in the foreseeable future and it is in the best interests of the company to dispose of the business and focus its resources on energy.

HONG KONG, July 5 (Reuters) - China Rongsheng Heavy Industries Group, China’s largest private shipbuilder, appealed for financial help from the Chinese government and big shareholders on Friday after cutting its workforce and delaying payments to suppliers.

Analysts said the company could be the biggest casualty of a local shipbuilding industry suffering from overcapacity and shrinking orders amid a global shipping downturn. New ship orders for Chinese builders fell by about half last year.

Hours after China Rongsheng made its appeal in a filing to the Hong Kong stock exchange, where the company is listed, Beijing vowed to bring about the orderly closure of some factories in industries plagued by overcapacity.

The statement by the State Council, or cabinet, laid out broad plans to ensure banks support the kind of economic rebalancing Beijing wants as it looks to focus more on high-end manufacturing. It did not mention any specific industries or companies and there was no suggestion it was referring to Rongsheng.

China Rongsheng said it was expecting a net loss for the six months that ended June 30 from a year earlier, according to the filing. It gave no figures.

Rongsheng shares plunged 16 percent to a record low in heavy turnover on Friday, leaving its market capitalisation at just under $1 billion. The Hang Seng Index climbed 1.9 percent. China Rongsheng is down 28.2 percent on the year.

In its filing, China Rongsheng said some workers had been made redundant, although it gave no numbers or timeframe for the losses. The company did not immediately respond to requests for more information.

China Rongsheng has said it won only two shipbuilding orders worth $55.6 million last year when its target was $1.8 billion worth of contracts. This year, it received orders to build two drilling rigs used in oil exploration, worth $360 million.

By contrast, another Chinese shipbuilder, Singapore-listed Yangzijiang Shipbuilding (Holdings) Ltd, has secured total orders of $1 billion in the first half, Barclays said.

While the Chinese shipbuilding industry faced “unprecedented challenges”, China Rongsheng’s board was confident management could ease pressure on working capital in the near future and maintain normal operations, the company said in the filing.

According to its December 2012 annual report, issued on March 26, China Rongsheng’s cash and cash equivalents fell to 2.1 billion yuan from 6.3 billion yuan a year ago.

“The group is ... actively seeking financial support from the government and the substantial shareholders of the company, and increasing its efforts in negotiations with its customers to maximise the collection of receivables,” China Rongsheng said in the filing.

A note from Macquarie Equities research said the statement highlighted the “severity” of China Rongsheng’s liquidity problems, adding this was not necessarily representative of the wider sector.

It said other listed Chinese shipyards were not as leveraged as China Rongsheng. The loan from Zhang was a surprise, it said, showing how badly the company needed cash.

“Rongsheng will need to address the problems immediately to reassure the market,” said Martin Rowe, managing director of Clarkson Asia Limited, a global shipping services provider.

The Chinese government has been trying to support the domestic shipping industry since the 2008 financial crisis, and local media reports said this week Beijing was considering policies to revive the shipbuilding business.

The holding orders of Chinese shipyards dropped 23 percent in the first five months of this year compared with a year earlier, according to the China Association of the National Shipbuilding Industry. New orders dropped to a seven-year low in 2012. ($1=6.1258 yuan) (Additional reporting by Yimou Lee and Twinnie Siu in Hong Kong and Keith Wallis in Singapore; Editing by Dean Yates)

HONG KONG (Reuters) - Jiangsu Rongsheng Heavy Industries Co Ltd has appointed Morgan Stanleyand JP Morganto finalize plans for its long-awaited IPO in Hong Kong, aiming to raise up to $1.5 billion in the fourth quarter, sources told Reuters on Tuesday.

This is Rongsheng’s latest bid to go public after it failed to raise more than $2 billion from a planned IPO in Hong Kong in 2008, mainly as a result of the global financial crisis.

Rongsheng"s early main shareholders included an Asia investment arm of Goldman Sachs, U.S. hedge fund D.E. Shaw and New Horizon, a China fund founded by the son of Chinese Premier Wen Jiabao.

The three investors sold off their stakes in Rongsheng for a profit early this year, said the sources familiar with the situation. Representatives for the banks, funds and Rongsheng all declined to comment.

Rongsheng’s revived IPO plan comes at a challenging time. Smaller domestic rival, New Century Shipbuilding, slashed its Singapore IPO in half last week, planning to raise up to $560 million from the originally planned $1.24 billion due to weak market conditions.

After the reduction of the number of shares offered, New Century Shipbuilding’s offering price represents a multiple of 6.5 times to 7.9 times forecast earnings for 2010.

Given uncertainty in the global shipbuilding business environment as well as growing concerns over a huge flow of fund-raising events in Hong Kong, investment bankers suggest the potential size for Rongsheng could be $1 billion to $1.5 billion, according to the sources.

Rongsheng is seeking to tap capital markets to fund fast growth and aims to catch up with bigger state-owned rivals such as Guangzhou Shipyard International Co Ltd.

Rongsheng won a $484 million deal to build four ships for Oman Shipping Co last year. The vessels would carry exports from an iron ore pellet plant in northern Oman which is expected to begin production in the second half of 2010.

(Bloomberg) — China Rongsheng Heavy Industries Group Holdings Ltd., which hasn’t announced any 2012 ship orders, may find winning deals even harder as a company owned by its billionaire chairman faces an insider-trading probe.

Rongsheng, based in Shanghai, has tumbled 87 percent since a November 2010 initial public offering because of concerns about delivery delays and a global slump in ship orders caused by a glut of vessels. The shipbuilder, which operates facilities in Jiangsu and Anhui provinces, also said yesterday that first- half profit probably dropped “significantly” because of falling prices and slowing orders.

The probe won’t affect day-to-day operations run by Chief Executive Officer Chen Qiang, as Chairman Zhang only has a non- executive role, Rongsheng said in a statement yesterday. Zhang wasn’t available for comment yesterday, according to Doris Chung, public relations manager at Glorious Property Holdings Ltd., a developer he controls.

Chen isn’t aware of Zhang’s personal business dealings and he has no plans to leave Rongsheng, he said yesterday by text message in reply to Bloomberg News questions. The CEO may help reassure potential customers as he is well-known among shipowners, said Lawrence Li, an analyst at UOB Kay Hian Holdings Ltd.

Zhang owns 46 percent of Rongsheng and 64 percent of Glorious Property, according to data compiled by Bloomberg. The developer dropped 1.7 percent to close at HK$1.16 in Hong Kong today after falling 11 percent yesterday. Zhang’s listed holdings are worth about $1.2 billion, according to data compiled by Bloomberg.

Zhang, who holds a Master’s of Business Administration degree from Asia Macau International Open University, started in building materials and construction subcontracting before getting into real estate. Construction of his first project, in Shanghai, began in 1996, according to Glorious Property’s IPO prospectus. He got into shipbuilding after discussing the idea with Chen at a Shanghai Young Entrepreneurs’ Association event in 2001, according to Rongsheng’s sale document. He formed the company that grew into Rongsheng three years later.

“People in his hometown think Zhang is a legend as he expanded two companies in different sectors so quickly,” said Ji Fenghua, chairman of Nantong Mingde Group, a shipyard located next to Rongsheng’s facility in Nantong city, Jiangsu province. The billionaire maintains a low profile, said Ji, who has never seen him at meetings organized by the local government.

Rongsheng raised HK$14 billion in its 2010 IPO, selling shares at HK$8 each. The company’s market value has fallen by about $6.1 billion to $1 billion, based on data compiled by Bloomberg.

Rongsheng, which also makes engines and excavators, had outstanding orders for 98 ships as of June 2012, according to Clarkson. It employed 7,046 people at the end of last year, according to its annual report. The shipbuilder has built a pipe-laying vessel for Cnooc and it has a strategic cooperation agreement with the energy company.

SHANGHAI–A Chinese shipbuilding magnate stepped down as chairman of two companies, weeks after an investment firm he controls paid US$14.2 million to settle U.S. insider-trading allegations.

Analysts welcomed the resignation by Zhang Zhirong, a founder of China Rongsheng Heavy Industries Group Holdings Ltd. (CGVYY, 1101.HK), saying the insider-trading case had put a cloud over the shipbuilding company.

A China Rongsheng spokesman said Mr. Zhang resigned for personal reasons but declined to comment further. He was succeeded by Chen Qiang, the company’s chief executive.

China Rongsheng had enjoyed close ties with Cnooc. The companies in 2010 entered into an agreement in which the shipbuilder would construct high-end, offshore vessels for oil exploration. The agreement was a bid to help China Rongsheng reduce its reliance on building cargo vessels with lower value added.

Analysts had worried that the Well Advantage insider-trading case would strain ties between China Rongsheng and Cnooc. It wasn’t clear whether relations would improve now that Mr. Zhang has stepped down as China Rongsheng’s chairman.

His successor, Mr. Chen, will have to contend with industry overcapacity that has battered Chinese shipbuilders by depressing vessel prices. Analysts have estimated that as much as half of China’s shipbuilding capacity isn’t needed and that between 30% to 50% of shipbuilders could fail in the next two years.

China Rongsheng faces challenges despite winning a contract in 2008 to build 12 massive ships designed to carry iron ore for Brazilian mining company Vale SA (VALE, VALE3BR). Four of the ships, known as Valemaxes, have been completed, with a fifth due for delivery next month. Each vessel costs around US$120 million. But Beijing has barred Valemax ships from docking at Chinese ports, putting future orders in doubt.

“We continue to be cautious on the medium-term prospects for China Rongsheng, given the overall collapse in bulk-vessel ordering and pricing, which we expect to continue in 2013,” Barclay’s Mr. Windham wrote in a research note last month.

China Rongsheng in August cited euro-zone debt woes and other economic issues for pulling out of a deal to acquire 55% of Anhui Quanchai Engine Co. (600218.SH), a Chinese diesel-engine maker with a market value of 2.55 billion yuan. The deal was part of China Rongsheng’s strategy to diversify into other heavy-industry sectors.

China Rongsheng’s shares closed unchanged at 1.50 Hong Kong dollars (19 U.S. cents) on Monday, before Mr. Zhang’s resignation was announced. The closing price was 81% lower than the company’s initial-public-offering price in 2010.

Rongsheng return: Ex-Chinese shipbuilder Jiangsu Rongsheng Heavy Industries is apparently making a comeback. The Nantong-based yard was once China’s largest privately owned shipyard but the debt-laden yard exited the shipbuilding business in 2014 following the global financial crash. But this week it inked a letter of intent for 10 bulker newbuildings with Greek shipowner George Economou’s Cardiff Marine. Sources said that Rongsheng’s chief executive David Luan has been rehired to restart Rongsheng.

Rongsheng has borrowed billions of dollars in debt since its launch in 2005, fueling a rapid expansion that has made it one of China"s biggest three shipbuilders. But a global slowdown in demand for new vessels over the past few years has hit the firm hard.

In July Rongsheng, which is owned by private investors, said it was in discussions with a number of banks about "renewing existing credit facilities." The company also said it has reached an accord with a company controlled by key shareholder

said in a written statement that a recovery in the shipbuilding industry is likely to be slow due to an imbalance between supply and demand. "Although the [shipbuilding] industry has recently showed positive signs that point to a rebound, neither new order price nor volume confirms a recovery," he said. "Shipbuilding companies still encounter difficulty in earning profits on orders."

China Rongsheng Heavy Industries Group Holdings Ltd, the private-sector shipbuilder that had sought financial assistance, has secured cash for restructuring and announced changing the company"s name as it shifts focus to energy.

Shifting its focus to oil will need a lot more funds, which Rongsheng already struggled to get as a shipbuilder, said Francis Lun, chief executive officer of Geo Securities Ltd.

The company had sought help from the government to benefit from a rebound in China"s shipbuilding industry after cutting its workforce and running up huge debts amid a global downturn in orders.

In September the Jiangsu shipyard unit was listed among 51 shipbuilding facilities in China deemed worthy of policy support as the industry grapples with overcapacity.

Rongsheng said it has now received the results of an appraisal by an independent assessor, which will be used as the basis for the restructuring in which it also plans to change its name to China Huarong Energy Co to more accurately reflect its expansion and new business scope.

Some of Rongsheng"s subsidiaries, including Hefei Rong An Power Machinery Co and Rongsheng Machinery Co, signed agreements with domestic lenders, led by Shanghai Pudong Development Bank, to extend debt repayments to the end of 2015.

Shares in the maker of bulk carriers and oil tankers had been suspended from trading since Aug 29 in Hong Kong, pending the restructuring details. Rongsheng had first-half net losses of 3.06 billion yuan ($501 million), more than double last year"s.

Rongsheng was overdue on principal and interest payments on 8.57 billion yuan of bank loans on June 30, according to a Hong Kong Stock Exchange filing on Aug 29.

The shipyard of China Rongsheng Heavy Industries Group Holdings Ltd in Rugao, Jiangsu province. The company will generate HK$2.55 billion ($326.4 million) in a share sale in the next six months and HK$3.23 billion thereafter. Li Junfeng / China Daily

Looking through our archives, Seatrade Global ran a story on China Ocean Shipbuilding Industry Group’s (Cosig) 2013 results exactly a year ago which almost reads like a carbon copy of this year’s results report, except that the loss figures have gotten bigger and the going concern issue is more pressing.

Turning attention to another beleaguered Chinese shipbuilder, China Rongsheng Heavy Industries also faced a second year of going concern issues. While it has managed to reduce 2014 losses to RMB7.8bn ($1.3bn) from RMB8.7bn previously, it has come at a tremendous cost with revenue negative to the tune of RMB3.9bn in contrast to revenue of RMB1.34bn in 2013, due to the decrease of revenue from shipbuilding and other contracts and the reversal of revenue from cancellation of shipbuilding contracts as the group moved to restructure its shipbuilding business.

Rongsheng’s liabilities situation would appear to be even worse. As at 31 December 2014 current liabilities exceeded current assets by RMB20.7bn. Total borrowings and finance lease liabilities of the group were RMB22.6bn, of which RMB20.8bn is due within 12 months. Of this, RMB528.0m is overdue and has not been renewed or repaid subsequent to year-end.

Rongsheng management reassured however that “a series of plans and measures to mitigate liquidity pressure have been taken to improve the financial and liquidity positions of the group (and) the group has also been actively negotiating with the banks regarding the current and non-current borrowings”.

It should be noted that management has made similar statements at the past full-year results as well. To be fair this has proven reliable and the banks have been stayed thus far. The next critical stage in Rongsheng’s rehabilitation must be the divestment of the shipbuilding business and the restoration of credit.

This is proving to be quite an endeavour however. Rongsheng has announced it is in talks with a bigger player, believed to be a Chinese state-owned shipyard group, and has until the end of June to seal a deal but the state of its finances and operations may prove an impediment.

According to local reports, as far back as last May, provincial officials tried to help by sponsoring a meeting between Rongsheng and state-owned China State Shipbuilding Corp (CSSC) aimed at securing a possible bailout for Rongsheng.

Talks ended without an agreement, with CSSC sources quoted as saying the complexity of Rongsheng"s asset structure and heavy debt worked against CSSC against pursuing a tie-up. Factors included an estimated RMB5bn in costs to restart full production in addition to the massive debt load.

Looking to the future, Rongsheng has its sights firmly set on getting out of the shipbuilding business and focusing on its new energy business. “We sorted and optimised our order book by reducing the number of vessels under construction and cancelling some shipbuilding orders. In the period, we negotiated proactively with ship owners and reached agreement with them on certain orders on hand, resulting in the cancellation, revision and variation of a number of shipbuilding contracts,” the company said.

It added: “We believe that this action will reduce our burden on working capital and effectively reduce the credit risk of our order book.” Provided the divestment plan manages to be well-executed, Rongsheng should emerge from the dark days into a relatively brighter future.

Cosig is also looking to diversify into the energy business but is maintaining its stronghold in shipbuilding and relying on consolidation and other government aid measures to weather the storm.

Troubled China shipbuilders are working hard to rehabilitate themselves. While some have restructured, in the case of Guangzhou Shipyard International and its parent CSSC, others such as Cosig and Rongsheng are making extraordinary efforts to diversify to remain viable.

* Yangzijiang says only interested in Rongsheng * Yangzijiang expects decision on investment by end-June * Yangzijiang 1Q net profit falls 12 pct (Recasts, adds details, comments) SINGAPORE, April 30 (Reuters) - China"s Yangzijiang Shipbuilding Holdings Ltd is considering a possible investment in troubled peer China Huarong Energy Co Ltd , formerly known as China Rongsheng, its executive chairman said on Thursday. Ren Yuanlin said the company was still in early talks with stakeholders, and expected to make a decision on the investment by end-June. "The government, banks, and Rongsheng"s major shareholder all hope we can be part of the deal, but whether or not we will get in depends on the asset price," he told reporters at a post-earnings briefing in Singapore, where the company is listed. "We are not interested in anyone else but Rongsheng." Yangzijiang, in which Ren owns a 26 percent stake and is the biggest shareholder, is one of China"s biggest shipbuilders, and the country"s most profitable listed shipyard. Hong Kong-listed China Rongsheng recently changed its name to China Huarong after expanding into oil and gas development and production. It is one of China"s largest private shipbuilders, and has been struggling with high debt and a slowdown in the shipbuilding industry in recent years. Yangzijiang reported earlier in the day that its first quarter net profit dropped 12 percent, as investment income and shipbuilding revenue both weakened. ($1 = 6.1989 Chinese yuan) (Reporting by Aradhana Aravindan and Rujun Shen; Editing by Miral Fahmy)

Another once-leading privately-owned yard China Huarong Energy Company, previously and better known as China Rongsheng Heavy Industries, continues to struggle with debts and ongoing talks with its creditors. The shipbuilder with huge yard facilities is now literally a �ghost yard�, where operations have ceased as funds dried up.

Jiangsu Rongsheng Heavy Industries Group Co. used to employ more than 30,000 people in the eastern city of Rugao. Once China�s largest shipbuilder, by 2015 Rongsheng was on the verge of bankruptcy. Orders had dried up and banks are refusing credit. Questions have been raised about the shipyard�s business practices, including allegations of padded order books. And Rongsheng was apparently behind on repaying some of the 20.4 billion yuan in combined debt owed to 14 banks, three trusts and three leasing firms.

Rongsheng is on the ropes now that it had completed a multi-year order for so-called Valemax ships for the Brazilian iron ore mining giant Companhia Vale do Rio Doce. The last of these 16 bulk carriers, the Ore Ningbo, was delivered in January 2015. With a carrying capacity of up to 400,000 tons, Valemaxes are the world�s largest ore carriers. Vale hired Rongsheng to build the ships starting in 2008, and has tolerated the shipyard�s slow pace: The Ore Ningbo was delivered three years late. Rongsheng employees said the Ore Ningbo may have been the shipyard�s last product because no new ship orders are expected and all contracts for unfinished ships have either been canceled or are in jeopardy.

Founder and former chairman Zhang Zhirong started the company in 2005 with money made when he worked as a property developer in the 1990s. The new shipyard stunned the industry by clinching major vessel orders from the start, even at a time when most of the world�s shipyards were slumping. Rongsheng�s success attracted investors and banks to the company�s side, fueling its expansion.

The shipyard, a sprawling facility spread across one-third of Changqingsha Island in the middle of the Yangtze River, suffered from a lack of capacity and management problems. As a result, the company had trouble meeting its contract obligations, including delivery timetables. Rongsheng�s problems were tied to difficulties with delivering ships. Many of Rongsheng�s order cancellations were due to its own delivery delays.

After the global financial crisis of 2008, many ship owners could no longer afford paying in advance for new vessels. So builders such as Rongsheng started arranging up-front financing with Chinese banks that got projects off the ground.

Rongsheng built ships with a combined capacity of 8 million tons in 2010 and was preparing to begin filling US$ 3 billion in new orders the following year. But the company�s 2011 orders wound up totaling only US$ 1.8 billion. That same year, Rongsheng�s customers canceled contracts for 23 new vessels.

In 2012, Rongsheng received orders for only two ships. Layoffs ensued, with some 20,000 workers getting the axe. The company closed the year with a net loss of 573 million yuan, down from a 1.7 billion yuan net profit in 2011 and despite 1.27 billion yuan in government subsidies. The bleeding worsened in 2013, with 8.7 billion yuan in reported losses. Despite a recovery of the Chinese shipbuilding industry in 2014, Rongsheng saw no relief, as its clients canceled orders for 59 vessels that year.

Roxen Shipping, a company controlled by Chinese businessman Guan Xiong, reportedly stepped in to rescue some US$ 2 billion worth of ship contracts that were canceled by Rongsheng�s other customers. Without these orders, Rongsheng never would have maintained its status as the No. 1 shipbuilder in China from 2009 to 2013.

Rongsheng�s capital crunch worsened since February 2014, when the China Development Bank (CDB) demanded more collateral after the company failed to make a scheduled payment on a 710 million yuan loan. When Rongsheng refused, the CDB called the loan. Other banks that issued loans to the shipbuilder had taken similar steps.

Rongsheng�s weak financial position was highlighted by a third-quarter 2014 financial report in which the company posted a net loss of 2.4 billion yuan. It also reported 31.3 billion yuan in liabilities, including 7.6 billion yuan worth of outstanding short-term debt.

It would cost at least 5 billion yuan to restart operations at Rongsheng�s facility, plus they have a huge amount of debt. Buying Rongsheng would not be a good deal.

The company said that the struggles of its shipbuilding arm, Jiangsu Rongsheng Heavy Industries, had been hampering efforts to expand in energy services

China Rongsheng Heavy Industries Group Holdings Limited [1101.HK] has announced that it has signed a memorandum of understanding that will see its shipbuilding business, Jiangsu Rongsheng Heavy Industries, sold to an undisclosed potential purchaser.

The deal involves the core assets and liabilities of both its onshore shipbuilding and offshore engineering business, though the company stressed that a formal transaction agreement is still pending.

According to the company, the depressed shipbuilding market had led to operational difficulties at Jiangsu Rongsheng Heavy Industries, while its highly-leveraged state was also interfering with the company"s efforts to expand in oil and gas exploration elsewhere.

"The Potential Transaction shall adjust and optimize the assets and business of the Group, and divest the relevant assets and liabilities of the shipbuilding business and offshore engineering business, which shall help to ease the debt burden of the Group, enhance the flexibility of fund utilization, better implement the strategy of business transformation and transformation into an energy service provider focusing in the oil and natural gas market," said the company.

It was reported in 2012 that in the face of market difficulties, China Rongsheng Heavy Industries had turned its focus to building containerships with a "green design" as one its key products.

However, a year later, the company was reported as saying that the Chinese shipbuilding industry was still experiencing "unprecedented challenges" as demand waned and ship prices failed to increase.

Since Beijing appears intent on telling investors it is serious about changing the investment-led growth model of the world"s second-biggest economy and controlling a credit splurge, it may seem like the writing is on the wall for China Rongsheng Heavy Industries Group <1101.HK>.

Yet analysts say the government is more likely than not to judge that Rongsheng, which employs around 20,000 workers and has received state patronage, is too big and well connected to fail.

Supporting Rongsheng will not mean China"s economic reform plans are derailed, they say. Instead, it will mean reforms will be gradual and the government will cherry-pick firms it wants to support, which will exclude the small, private shipbuilders that have been folding in waves.

"Rongsheng is a flagship in the industry," said Lawrence Li, an analyst with UOB Kay Hian in Shanghai. "The government will definitely provide assistance if companies like this are in trouble."

Analysts say Rongsheng is possibly the largest casualty of a sector that has grown over the past decade into the world"s biggest shipbuilding industry by construction capacity. Amid a global shipping downturn, new orders for Chinese builders fell by half last year. In Rongsheng"s case, it won orders worth $55.6 million last year, compared with a target of $1.8 billion.

Rongsheng appealed for government aid on Friday, saying it was cutting its workforce and delaying payments to suppliers to deal with tightened cash flow.

In the prospectus for its initial public offer, Rongsheng said it received 520 million yuan of subsidies from the Rugao city government in the southern province of Jiangsu, where the company is based.

The state funds paid for research and development of new types of vessels, and were based in part on the "essential role we play in the local economy", Rongsheng said.

China"s shipbuilding woes are partly of its own making. A global downturn in demand has hammered the sector since 2008, but a national obsession for global dominance in some industries led China to declare in the early 2000s that it wanted to be the world"s top shipbuilding nation by 2015.

A state-induced spike in the number of Chinese shipbuilders followed as the country led a three-fold rise in new global shipbuilding capacity in the past decade.

As the world"s largest shipbuilder, it had 1,647 shipyards in 2012, data from China Association of the National Shipbuilding Industry showed. Over 60 percent of its shipbuilders are based in Rongsheng"s province of Jiangsu.

Despite this, the government is providing support for the industry, a sign it will also support Rongsheng given its prominence in the sector, analysts said.

Analysts say what separates Rongsheng from many other companies are its connections with the government and state banks. Rongsheng"s Chief Executive Chen Qiang, for example, enjoys "special government allowances" granted by China"s cabinet, the firm"s annual reports say.

Rongsheng also said in its IPO prospectus that it has two five-year financing deals with Export-Import Bank of China that end in 2014 and in 2015, and a 10-year agreement with Bank of China <3988.HK> starting from 2009.

After all, local government coffers will suffer the biggest blow if Rongsheng goes bust. The firm had 168 million yuan of deferred income taxes in 2012.

China’s Rongsheng Heavy Industries—the largest private shipbuilder in the world’s number one shipbuilding country—is in a bad shape. Struggling with plummeting orders and soaring debts, on Friday the company

Rongsheng reported a net loss of $93.5 million in 2012 and said—with no details provided—that it expects a further loss in the first half of this year. Its orders last year numbered just two, compared to 24 in 2011 and it recently

China’s shipbuilding industry body said on Thursday that a third of the country’s yards could close within five years if the global economy does not pick up. “Because of the overall market, there’s no way out for the companies, so only the strongest will survive,” an analyst at Masterlink Securities in Shanghai