Yangzijiang Shipbuilding (Holdings) has entered a deal to issue zero-coupon convertible bonds to EDB Investments and Alexandrian Worldwide Inc. (AWI), which will take up S$25 million each, the Chinese shipbuilder said in a filing to SGX Friday.
EDBI is wholly owned by the Economic Development Board of Singapore. AWI was set up by Yangzijiang’s management team.
Yangzijiang said the convertible-bond agreement was aimed at bringing in strategic investors, with the net proceeds to be used for general corporate and working capital purposes.
The 12-month bonds will be mandatorily converted into shares of Yangzijiang at S$1.345 a share once approval is received for the proposed spinoff of Yangzijiang Financial Holding (YZJFH), the filing said; the shares closed Friday at S$1.49. Treasury shares will be used for the conversion to prevent dilution, the company said.
If the bonds are fully converted, the number of conversion shares is around 37.17 million, or an around 0.95 percent stake, the filing said.
Yangzijiang has previously announced its plan to spin off YZJFH to shareholders by way of dividend in specie.
Setting up R&D center
As part of the deal, Yangzijiang will set up an advanced maritime research and development center in Singapore to develop technologies around segments including green vessels, autonomous vessels, cyber-physical simulations and communication systems, the filing said.
“The shipbuilding industry will see strong demand for further developments in green vessel technology and we are committed to working with like-minded partners to seek breakthrough in this sector,” Ren Letian, executive chairman and CEO of Yangzijiang, said in the statement.
“With our first advanced maritime R&D center anchored in Singapore, we look forward to deepening our presence in Asia and leverage on Singapore’s R&D expertise to improve our standings within green shipbuilding and sustainability,” Ren Letian said.
Singapore headquarters for YZJFH
In addition, YZJFH plans to establish its headquarters and international investment division in Singapore, with plans to launch a fund focusing on advanced maritime sustainability-related investments, the filing said.
Ren Yuanlin, honorary chairman of the group, said YZJFH has identified new growth areas and investment mandates, and will expand into the fund and wealth management business in Greater China and Southeast Asia.
“With EDBI’s support, we expect to see more of such strategic partnerships with relevant parties in the future. Singapore remains pivotal to YZJFH’s expansion within the Asia Pacific region given its unrivalled status as a financial hub in this region,” Ren Yuanlin said in the statement.
The strategic investors have agreed to a six-month moratorium on their allotted shares in YZJFH, Yangzijiang said.
In addition, Yangzijiang said it was seeking an agreement from its largest shareholder, Ren Yuanlin, to also agree to a six-month moratorium on trading the 21.8 percent stake in YZJFH he will receive, as well as an another six-month moratorium on 50 percent of the stake afterward.
Yangzijiang said the moratoriums will bring “confidence and stability” to YZJFH’s shares after they are listed.