Dalian Shipbuilding Industry Offshore (DSIC Offshore), a subsidiary of Dalian Shipbuilding Industry Co., Ltd (DSIC), has completed a successful restructuring by way of an RMB1.78 billion insurance claim payout from China Export & Credit Insurance Corporation (CECIC). This is the first time in China that a non-listed company has been restructured via an insurance claim rather than from an injection of new capital.
DSIC Offshore, which specialises in the manufacturing of oil rigs, oil production platforms, drill ships, FPSOs and wind turbine installation vessels, as well as other fixed and floating drilling or oil and gas production facilities, was severely impacted due to the plunge in oil prices in 2015. The company had run up debts of up to RMB20 billion, which included wages owed by more than 6,000 migrant workers.
DSIC Offshore went into administration on 23 January 2019. Fangda Partners and Baker Tilly China were designated as the administrator for DSIC Offshore.
DSIC Offshore was not able to raise the finance to pay off the debt by conventional means. There were no investors and even the parent company, DSIC, was not able to inject capital. DSIC Offshore’s insurance policy covered the risk of order cancellations, but the likelihood was that would it take too long to process these claims.
Facing such an impasse, the Fangda team ventured an unprecedented solution that brought CECIC to the negotiation table and secured a whole package of insurance claims amounting to RMB1.78 billion. To date, this is the highest insurance claim in China’s offshore manufacturing sector.
The solution lay in the fact that the Fangda team is well-versed in the latest policies and market trends that CECIC, as a policy-oriented insurance company, is expected to shoulder a big responsibility in assisting China’s export-oriented manufacturing enterprises, especially during the pandemic. Following the restructuring, DSIC Offshore is back as a going concern with a bright future.