China Cosco Holdings Company Ltd. (HKG:1919; SHA:601919), China’s largest and the world’s second-largest company, announced it will sell all of its shares in the subsidiary company Cosco Container Industries Ltd. for 7.54 billion yuan ($1.23 billion) -- a move to save itself from the fate of delisting after two consecutive years in the red, according to 21CBH.
Cosco itself is a listed flagship subsidiary of the Cosco Group, which is a state-owned corporation. In 2011, Cosco reported a loss of 10.45 billion yuan ($1.70 billion) and a loss of 9.56 billion yuan ($1.56 billion) in 2012. By Chinese trading regulations, after two consecutive years of losses, the company has been warned of possible delisting, according to 21CBH, a Chinese financial news website.
In its Q1 report, Cosco once again reported heavy loss of 1.99 billion yuan ($324 million), and, if the company cannot reverse its loss by the end of 2013, it will be delisted. In a bid to avoid delisting, Cosco will sell its shares in Cosco Container Industries and will make a tidy profit of 2.91 billion yuan ($474 million) before taxes.
This is not the first move on Cosco’s part to avoid delisting. On March 27, Cosco sold another subsidiary, Cosco Logistics Ltd., for 6.74 billion yuan ($1.10 billion). Cosco made a profit of 2.38 billion yuan ($388 million) from that sale, 21CBH reports.