China Shipping Container Lines to become limited-liability company

China Shipping Container Lines to become limited-liability company    China Shipping Group is planning to turn its fast-growing container subsidiary China Shipping Container Lines into a joint-stock limited company that could raise capital internationally.
   Commenting on the development of China Shipping Container Lines, state-owned China Shipping Group said that the Chinese government has required “the establishment of a modernized enterprise system.” Following this requirement and given the development of China Shipping Container
Lines, China Shipping Group and other shareholders intend to apply for the conversion of the business into a limited company this month.
   Under Chinese law, there will be a three-year period after the conversion when no transfers of shares in the new limited company will be allowed.
   In a related development, Shanghai-based tanker and bulk operator China Shipping Development Co. Ltd., another subsidiary of China Shipping Group, decided not to exercise an option to buy back some or all of its former 25-percent stake in China Shipping Container Lines. China Shipping Development, one of the founding shareholders of China Shipping Container Lines, sold its stake in the business to the group parent company China Shipping Group for a symbolic 1 Renminbi (12 cents) in 2002, when the container carrier was making heavy losses.
   Saying that China Shipping Container Lines may require “a substantial amount of funds,” China Shipping Development said that the exercise of the option to acquire a new stake in China Shipping Container Lines would “overburden the company’s current financial situation and affect the company’s development plans of concentrating on the development of oil transportation and dry bulk business.”
   In a rare public statement about the situation of China Shipping Container Lines, established in 1997, China Shipping said that the container carrier made cumulative losses of Renminbi2.2 billion ($269 million) in its first five years of trading. In June 2002, the carrier had a negative book value of Renminbi430 million ($52 million).
   However, China Shipping Group injected a total of about Renminbi2.7 billion ($326 million) capital into the container business in December 2002, September
2003 and October 2003. The company’s public statement does not provide information on the container carrier’s results for 2003.
   The announcement of the conversion of China Shipping Container Lines into a limited-liability company comes as Peninsular and Oriental Steam Navigation Co. and Royal Nedlloyd are said to be considering a public listing for their subsidiary P&O Nedlloyd Container Lines.