The TITAN HONOUR, the shipyard's first vessel, is launched

New Chinese shipyard bought outright by Titan Petrochemicals
Yard launched its first ship last month and is now 100% owned by Titan


Integrated oil logistics provider Titan Petrochemicals Group Limited (Titan) today announced that it has reached a definitive agreement to acquire a 100% interest in Titan Quanzhou Shipyard from its majority shareholder for a total consideration of US$170 million (HK$1,326 million).

The consideration consists of approximately US$57 million in cash and approximately US$113 million in shares, US$29 million of which is subject to a three year earn-out arrangement.

The acquisition is in line with Titan’s stated strategy of transforming its business away from the volatile VLCC business, towards an integrated oil logistics model, in order to accelerate growth and increase stability in earnings.

Titan Quanzhou Shipyard, said the company,  is a unique, world-class multi-functional facility focused on three businesses: (i) ship repair, (ii) ship building and (iii) offshore engineering.

The ship building yard commenced operations in 2006 and the first ship was launched in August 2007. This was the 6500 ton bunkering tanker TITAN HONOUR (see picture)


 Titan Quanzhou Shipyard currently has a strong order book of 22 vessels, amounting to approximately US$210 million. Construction of the ship repair and offshore engineering yards started in December 2006 and all three businesses are expected to be fully operational by the end of 2009.

Mr. Barry Cheung, Chief Executive of Titan, said:

“We believe that now is the right time to bring Titan Quanzhou Shipyard into the Group’s business portfolio. The yard is
developing very rapidly and its design features will allow it to benefit from the favourable and robust market environment. This transaction will further transform the composition of Titan’s earnings base to a well-balanced and diversified portfolio, enabling us to create sustainable value for our shareholders going forward.

“The structure of this transaction allows Titan to capture the significant upside in the shipyard’s business plan, whilst at the same time providing a degree of performance protection,” Mr. Cheung added.

The transaction, which is subject to independent shareholder approval and customary closing conditions, is expected to close in October, 2007.

Merrill Lynch is acting as the exclusive financial adviser to Titan.