Logistics management service provider Cosco Shipping International has proposed the disposal of a 60% stake in Cosco Shipping Singapore for US$42.4 million ($57.01 million) in an interested party transaction.
Cosco Shipping International holds all the issued shares in Cosco Singapore which is in the business of dry bulk shipping.
Cosco Shipping Singapore will be sold to Cosco (HK) Shipping, a wholly-owned subsidiary of Cosco Shipping Bulk, which is in turn wholly-owned by China Cosco Shipping Corporation.
The latter is incidentally an indirect controlling shareholder of Cosco Shipping International.
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The consideration price was arrived at after – what the company calls – arm’s length negotiations with the purchaser on a willing-buyer and willing-seller basis. It also takes into account an independent valuation as at June 30.
The proposed transaction represents Cosco Shipping International’s strategic decision to streamline its current conglomerate structure and focus on its core logistics business to achieve better performance.
The company notes that its dry bulk shipping business took a hit from its limited marketing capabilities and lack of market competitiveness for it only has three vessels of the same ship type.
For now, Cosco Shipping International believes it will still benefit from holding a 40% stake in Cosco Shipping Singapore. With this, it will also be able to leverage on Cosco Shipping Bulk’s global presence and fleet of more than 400 vessels to achieve sustainable development and growth.
The company is looking to use the sale proceeds from the proposed disposal to expand and promote the development of the group's logistics business in South and South-east Asia, and for working capital requirements.
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The completion of the sale and purchase agreement hinges on the approval of Cosco Shipping International's shareholders.
Shares of Cosco Shipping International closed up 0.5 cents or 1.8% at 28 cents on Sep 30, before the announcement.
Cover image: Cosco Shipping International