Bond sale to buy six ships

COSCO Shipping Co, a unit of China's biggest shipping company, said it plans to sell 1.05 billion yuan (US$138 million) of convertible bonds to buy six ships.

The four multipurpose vessels and two semi-submersibles, which are used to move oil rigs, have a combined capacity of 200,000 tons, the company said in a statement to Shanghai's stock exchange yesterday. Shareholders will vote on September 3 on the planned sale of bonds that can be converted into stock, it added.

Chinese shippers have expanded their fleets because the country's surging trade is driving up freight rates. The Baltic Dry Index, a benchmark for the price of carrying coal, iron ore and other commodities, has jumped 66 percent to a record this year.

Cosco Shipping "will continue to gain from a niche market for handling conventional cargoes like machinery," said Luo Xiong, an analyst at China Merchants Securities Co in Shanghai. "Conventional cargo rates will climb in line with dry bulk rates."

Bondholders will receive call warrants for each six-year bond they hold, Cosco Shipping, based in the southern Chinese city of Guangzhou, capital of Guangdong Province, said. Two warrants confer the right to buy one share, the firm said, without saying how many warrants would be linked to the bond sale.

Cosco Shipping, controlled by China Ocean Shipping (Group) Co, had 85 ships with a total capacity of 1.38 million deadweight tons as of June 30.