China Merchants Energy Shipping Lends USD600 Million to Its Subsidiary

Yicai

2017-05-12

(Yicai Global) May 12 -- China Merchants Energy Shipping Co. [SHG.601872] will provide a three-year loan worth USD600 million to China VLCC, a subsidiary in which the former owns a controlling stake, the company said in a statement. 

China VLCC specializes in offshore oil transport, investment holding and ship management, and was jointly incorporated by China Merchants Energy Shipping and Sinotrans & SCS Holdings Co., an affiliate of China Merchants Group, in Hong Kong in September 2014, with the two companies holding 51 percent and 49 percent stakes in the joint venture. The loan does not involve Sinotrans & SCS Holdings, so the deal amounts to a related-party transaction per listed company regulations.

Due to its short history of existence, China VLCC lacks the independent financing capability to cover capital costs incurred in recent operations, the statement noted, so the board of China Merchants Energy Shipping decided to offer the loan to help it fund production and business operations and reduce financing costs.

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