On July 24, Songfa Co., Ltd.—the listed entity for Hengli Heavy Industries—announced the approval of a proposal to use raised funds to increase the capital of its wholly-owned subsidiary, which in turn would increase the capital of its wholly-owned second-tier subsidiary to implement the planned investment projects. Through this tiered capital injection process, the entire sum of approximately RMB 6.941 billion (approximately $1.024 billion) in raised funds will be channeled into the second-tier subsidiary to expand production capacity.
According to the announcement, the China Securities Regulatory Commission has approved the registration of Guangdong Songfa Ceramics Co., Ltd.’s private placement of shares. Through this private placement of A-shares, Songfa raised a total of RMB 7 billion, and the actual net proceeds of approximately RMB 6.941 billion have been received.
Based on the plan, Songfa Co., Ltd. intends to use the proceeds from the offering to inject approximately RMB 6.941 billion into its wholly-owned subsidiary, Hengli Heavy Industries. Through Hengli Heavy Industries, the company will inject approximately RMB 6.791 billion into its wholly-owned sub-subsidiary, Hengli Shipbuilding, and approximately RMB 150 million into Hengli Ship Outfitting.
Songfa Co., Ltd. stated that this capital increase will be carried out in a single installment or in installments. Upon completion of the capital increase, Hengli Heavy Industries’ registered capital will increase from RMB 6.9 billion to RMB 13 billion, Hengli Shipbuilding’s registered capital will increase from RMB 12.4 billion to RMB 19 billion, and Hengli Outfitting’s registered capital will increase from RMB 20 million to RMB 100 million.
It is understood that Songfa will use the raised funds to increase capital in its subsidiaries to implement the following investment projects: the Integrated Green and Smart High-End Shipbuilding Project, the Hengli Shipbuilding Green Shipbuilding Curve Assembly Support Upgrade Project, and the Berths 3–6 Support Project for the Green High-End Shipbuilding Project. Hengli Shipbuilding is the implementing entity for the first two projects, while Hengli Shipbuilding and Hengli Outfitting are the implementing entities for the third project.
The announcement states that, to ensure the smooth implementation of the projects funded by the proceeds, and following approval by the 13th meeting of the Company’s seventh Board of Directors and the issuance of a no-objection verification opinion by the sponsor, Songfa has adjusted the planned investment amounts for these projects. The primary change concerns the project for berths No. 3 through No. 6—which support the green high-end shipbuilding project—where the planned investment from the proceeds has been revised from RMB 500 million to approximately RMB 441 million.
Songfa stated that upon completion of this capital increase, the financial strength and operational capabilities of the entities implementing the fundraising-funded projects will be further enhanced; this will help accelerate project implementation, further boost the company’s overall strength and industry competitiveness, and foster high-quality development.
Previously reported, the Integrated Green and Smart High-End Shipbuilding Project comprises two sub-projects: the Hengli Shipbuilding Green and Smart Equipment Manufacturing Project and the supporting facilities for the Hengli Shipbuilding Green High-End Shipbuilding Project. The project primarily involves the construction of onshore smart workshops and the renovation and expansion of other related supporting facilities, including the establishment of onshore production facilities such as a steel yard, a hull assembly workshop (including pre-treatment), a flat section workshop, a curved section workshop, and an advance outfitting workshop, as well as related supporting facilities.
The Hengli Shipbuilding “The Green Shipbuilding Supporting Upgrade Project for Curved Hull Block Manufacturing” is a key component of the Hengli Heavy Industries Industrial Park. The project primarily involves the construction of onshore production facilities, including a curved section workshop, a pre-outfitting workshop, a dynamic testing area, and supporting storage yards.
The Green High-End Shipbuilding Project, which supports the Berths 3–6 Project, primarily involves the construction of four outfitting berths (Nos. 3–6) capable of accommodating vessels ranging from 100,000 to 400,000 deadweight tons, primarily serving the Hengli Heavy Industries Industrial Park.
Once the fundraising projects are successfully implemented, Hengli Heavy Industries will have the capacity to simultaneously build 10 vessels with a deadweight tonnage of less than 200,000 DWT and 12 vessels with a deadweight tonnage of more than 200,000 DWT—a total of 22 berths—which will be used to rapidly fulfill Hengli Heavy Industries’ existing order backlog and meet future market expansion needs.
Upon the successful implementation of the fundraising-funded projects, Hengli Heavy Industries will possess a total of 22 shipbuilding berths—comprising 10 berths for vessels under 200,000 deadweight tons (DWT) and 12 berths for vessels exceeding 200,000 DWT—enabling the rapid fulfillment of its existing order book and meeting the demands of future market expansion.