UPDATE 1-China Rongsheng says seeks govt help, warns of H1 loss
HONG KONG, July 5 (Reuters) - China Rongsheng Heavy Industries Group, China's largest private shipbuilder, said on Friday it had sought financial help from the Chinese government and big shareholders after laying off some workers and delaying payments to suppliers.
Suffering from a downturn in the shipping industry, China Rongsheng said it was expecting a net loss for the six months that ended June 30 from a year earlier, according to a filing to the Hong Kong stock exchange. It gave no figures. (?)
Trading in China Rongsheng shares in Hong Kong will resume on Friday after being suspended on Thursday. On Wednesday, the company's shares closed down 10 percent at HK$1.06.
China Rongsheng gave no details on how many workers had been laid off. The Wall Street Journal said this week there had been 8,000 job cuts at China Rongsheng in recent months, representing some 40 percent of the firm's workforce.
China Rongsheng said it was coping with tightened cash flow by delaying payments to suppliers and workers, but said it found no evidence its subcontractors were failing to pay workers. It denied claims suppliers had towed away machinery from its Nantong production base in eastern Jiangsu province, near Shanghai.
The company said it was in talks with banks and financial institutions to renew existing credit lines.
"The group is also actively seeking financial support from the government and the substantial shareholders of the company, and increasing its efforts in negotiations with its customers to maximise the collection of receivables," it said in the filing.
Zhang Zhirong, one shareholder, gave an interest-free 200 million yuan ($32.65 million) loan on Wednesday, the company said.
China Rongsheng is a major supplier of bulk carriers that ship iron ore from producer nations such as Brazil to China. Brazil's Vale is one of its customers.
It posted a net loss of 572.6 million yuan in 2012, its worst-ever, despite getting government subsidies of 1.27 billion yuan.
According to its December 2012 annual report, issued on March 26, China Rongsheng's cash and cash equivalents fell to 2.1 billion yuan from 6.3 billion yuan a year ago. It had borrowings of 16.26 billion yuan that were due in less than a year, said the report, the latest financial statistics available on the company's website.
In the annual report, the company said it had "significant" cash outflows since some customers had sought to delay the delivery of new vessels.
The Chinese government has been trying to support the domestic shipping industry since the 2008 financial crisis, and local media reports said this week Beijing was considering policies to revive the shipbuilding business.
The shipping industry downturn cut new ship orders for Chinese builders by about half last year. ($1 = 6.1258 Chinese yuan)
(Reporting by Clement Tan and Twinnie Siu; Editing by Dean Yates)