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COSCO says it won’t seek bailout

By Wang Jiamei (Global Times)

08:26, January 31, 2013

China COSCO Holdings Co, which runs the world's largest bulk fleet, denied rumors that it was requesting hefty subsidies from the government, media reports said Wednesday, after the State-owned company forecast a second straight year of losses in 2012, which may put its Shanghai-listed shares under special treatment (ST).

"Our management has never thought about living on government rescue," Guo Huawei, secretary of the board at China COSCO, was quoted by the Shanghai-based National Business Daily on Wednesday as saying at a press conference in Beijing. "We will focus on structural adjustment of bulk shipping to turn around in the future."

The industry giant said in a filing to the Shanghai Stock Exchange (SSE) on Friday that a delisting risk warning, or ST mark, may be imposed on its A shares as the company's 2012 financial report is expected to record a huge loss for a second consecutive year. China COSCO registered a net loss of 10.4 billion yuan ($1.74 billion) in 2011.

According to SSE rules, if COSCO again posts a loss this year, its A shares will be suspended from trading, with the possibility of being delisted.

"It will be quite hard for the company to turn a profit given the continuing glut of shipping capacity in both domestic and global markets," said Zhou Dequan, deputy director of the Shanghai International Shipping Institute's Shipping Market Analysis Department.

"So far, the only favorable development that can be expected is that many of the expensive five-year vessel leases China COSCO signed in early 2008 will expire this year."

The shipping giant got trapped in these long-term, high-rate vessel leases - big contributors to its continuous losses - during the 2008 boom when the Baltic Dry Index (BDI), a gauge for measuring shipping costs of bulk commodities, recorded its historic high of 11,793 points. Since then, the financial crisis has driven the BDI down significantly, and it fluctuated between 600 and 1,200 points last year.

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