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COSCO raises US$1.97b to buy ships

(Bloomberg)
Updated: 2007-06-20 15:06

China COSCO Holdings Co, Asia's largest container line, sold 15 billion yuan (US$1.97 billion) of stock in Shanghai to buy new ships as Chinese exports of clothes, toys and televisions surge.

Investors bought 1.78 billion shares at 8.48 yuan each, the top end of the price range, on June 18, the company said in aShanghai stock exchangestatement today. The sale was the fourth biggest in China this year, according to Bloomberg data.

China's ports may handle 80 percent more containers by 2010 as companies move production to the country. Hong Kong-listed China COSCO sold shares in Shanghai for the first time after the city's benchmark stock index doubled this year to a record.

"The company needs to fund the expansion of its fleet and raising money in China is very easy right now," said Ji Lijun, an analyst at Shanghai Securities Co. "The move is also in-line with the government's directive to list more State-owned companies on mainland stock markets."

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China COSCO, based in Tianjin, plans to double its fleet capacity to 800,000 boxes by 2010, according to Ji. The company raised HK$9.52 billion in aninitial public offeringin Hong Kong in June 2005.

The Shanghai-listed shares were sold at a 22 percent discount to China COSCO's Hong Kong-listed stock. 

Chinese companies have sold more than 130 billion yuan (US$17 billion) worth of shares in Shanghai and Shenzhen this year.

China COSCO plans to spend 6 billion yuan of the sale proceeds on 12 new vessels, according to a share sale document. It will also use 1.68 billion yuan to buy a 51 percent stake in COSCO Logistics from its State-owned parent COSCO Group and another 401 million yuan for projects being developed by the logistics unit.

The 12 vessels will be built by two Chinese shipbuilders. Four of the ships, with a capacity of 10,000 boxes each, are due for delivery between 2008 and 2009. The other eight, able to hold 5,100 boxes apiece, will be delivered by the end of 2010.

China COSCO had a total of 26 container vessels on order at the end of 2006, with a combined capacity of 166,320 standard 20-foot boxes, it said in March. Its COSCO Container Lines Co unit operated 139 vessels with a combined capacity of 399,237 20-foot equivalent units at the end of last year.

The company also owns a 51 percent stake in COSCO Pacific Ltd, Asia's third-largest container terminal operator.