On November 26, the Zhejiang Bankruptcy Administrator issued the “Announcement on Recruiting Potential Investors for the Substantial Merger and Reorganization of Zhejiang Zengzhou Heavy Industry Technology (Zengzhou Heavy Industry) and Seven Other Companies.”
The announcement disclosed that on March 29, 2023, the Dinghai District People’s Court of Zhoushan City, Zhejiang Province (Dinghai Court) ruled to accept the reorganization application filed by Zengzhou Heavy Industry.
On March 30, 2023, the Dinghai Court ruled to accept the applications for substantive merger and reorganization with Zengzhou Heavy Industry submitted by Zhoushan Zengzhou Marine Equipment Manufacturing Co., Ltd., Zengzhou Group Co., Ltd., Yuyao Zengzhou Steel Pipe Factory, Ningbo Zengzhou Flange Fittings Manufacturing Co., Ltd., Ningbo Zengzhou Import and Export Co., Ltd., and Tangshan Fengnan District Zengzhou Steel Pipe Co., Ltd., and legally designated Zhejiang L&H Law Firm as the substantive merger and reorganization manager of the above seven companies.
In view of the fact that Zengzhou Heavy Industry, Zengzhou Group and Tangshan Fengnan District Zengzhou Steel Pipe have restructuring value, in order to safeguard the legitimate rights and interests of all creditors and debtors, in accordance with the principles of openness and marketization, and simultaneously achieve effective integration, value realization and sustainable development of high-quality assets, the administrator, under the supervision and guidance of Dinghai Court, decided to publicly recruit restructuring investors from the society.
Intended investors may formulate investment programs for all assets of Zengzhou Heavy Industry, Zengzhou Group and Fengnan Steel Pipe, or they may formulate investment programs for two or one of the companies according to their actual needs.
Public information shows that Zhejiang Zengzhou Shipbuilding Co., Ltd. is a wholly-owned subsidiary of Zengzhou Group and was established on August 20, 2007. The shipyard covers an area of 500,000 square meters and has a deep-water coastline of 800 meters. It is one of the key projects of large-scale shipbuilding and repair industry launched by Zhoushan City. Zengzhou Shipbuilding is one of the first 51 “white list” shipyards of the Ministry of Industry and Information Technology. At the end of December 2019, Zhejiang Zengzhou Shipbuilding was renamed Zhejiang Zengzhou Heavy Industry Technology.
Clarksons data shows that the last new ship order of Zengzhou Heavy Industry was for four 7,350 dwt general cargo ships from German owner Tom Worden Schiffs in January 2018 before it was renamed, with deliveries scheduled for March, June, September and December 2020, respectively. The previous order was in March 2017, when Zengzhou Shipbuilding successfully won the bid for China’s first 20,000-ton river-sea direct direct ship, which was the only order Zengzhou Shipbuilding received in 2017.
Due to long-term difficulties in obtaining new ship orders, Zengzhou Shipbuilding began to turn to the production of steel structural components and sought cooperation with Wuchang Shipbuilding Industry Group Co.,Ltd (“WS”), an affiliate of China Shipbuilding Industry Corporation, and has since gradually withdrawn from the shipbuilding field.
On December 28, 2016, the Zhejiang Provincial Government held a promotion meeting for the Zhoushan River-Sea Transport Service Center and a signing ceremony for major projects in Hangzhou. At the meeting, Wuhan Wuchuan Investment Holding Co. signed a comprehensive strategic cooperation project with Zhejiang Zengzhou Group,, focusing on cooperation in bridge steel structures, building steel structures, shipping, shipbuilding, international trade, military-civilian integration, etc. However, the merger and reorganization of WS and Zengzhou Shipbuilding was not completed in the end.
Zengzhou Heavy Industry last appeared in the media as a shipyard in July 2021, when it delivered the “Zhi Hai”, a major national engineering platform jointly built with the CSSC Ninth Design & Research Institute(CSSC NDRI). The “Zhi Hai” has a displacement of 2,000 tons, a total length of about 70 meters, a width of 13 meters, a speed of 16 knots, a maximum speed of 20 knots, a range of no less than 3,000 nautical miles, and a self-sustaining capacity of no less than 30 days.
In December 2021, Zhoushan Daily News said that Zhejiang Xulong Offshore Engineering Equipment Project leased all the plants of Zengzhou Heavy Industry and started production.
Under the current hot shipbuilding market, Zengzhou Heavy Industry, as a shipyard with many years of history, undoubtedly still has the value of reorganization. This merger and reorganization also means that Zengzhou Heavy Industry may usher in a turnaround and return to the shipbuilding market.