WUXI, China, July 7, 2014 /PRNewswire/ — WSP Holdings Limited (NYSE: WH) (“WSP Holdings” or the “Company”), a Chinese manufacturer of API (“American Petroleum Institute”) and non-API seamless casing, tubing and drill pipes used in oil and natural gas exploration, drilling and extraction (“Oil Country Tubular Goods” or “OCTG”), and other pipes and connectors, announced that the People’s Government of Bayingol Mongolia Prefecture (the “People’s Government”) has established an operation coordination group (the “Coordination Group”) to restructure Bazhou Seamless Oil Pipe Co., Ltd. (“Bazhou Seamless”), a subsidiary of Wuxi Seamless Oil Pipe Co., Ltd. (“Wuxi Seamless”), in Bazhou. The Coordination Group is chaired by three deputy governors of Bazhou and includes representatives from entities such as Bazhou Seamless, the Secretariat of the People’s Government, the Bazhou Economic Office (Finance Office), the Bazhou Commission of Economy and Information Technology, the Bazhou Finance Bureau, the State-owned Assets Management Co., Ltd. of Bazhou, Bank of China, Bazhou Branch, China Construction Bank, Bazhou Branch, Huaxia Bank, Urumqi Branch, and Xinjiang Tianxue Law Firm.
The Coordination Group has specifically proposed a solution for the restructuring of Bazhou Seamless, which follows the Chinese government’s policy to support the development of the southern Xinjiang, in order to manage the operation of the company, stabilize the employment of employees, facilitate the introduction of strategic investors, manage the company’s debts, promote the company’s development and implement risk prevention measures.
Bazhou Seamless was established in August 2008 with an initial investment of RMB450 million by Wuxi Seamless, the Company’s wholly-owned subsidiary, together with a bank loan of RMB1.2 billion, of which RMB1.18 billion was guaranteed by Wuxi Seamless.
Since the completion of the construction in April 2011, Bazhou Seamless has not reached effective production. Currently, Bazhou Seamless still has an outstanding bank loan of RMB1.1 billion and requires approximately RMB90 million each year from Wuxi Seamless to cover working capital and other expenses. As of today, the accounts payable to Wuxi Seamless reached RMB310 million. In connection with the restructuring, Wuxi Seamless intends to transfer a majority of its equity interests in Bazhou Seamless to a state-owned investment company while retaining a small portion of the equity interests and debt. In addition, Wuxi Seamless intends to withdraw its guarantee for the bank loan owed by Bazhou Seamless.
Upon the completion of this asset disposal, Wuxi Seamless will terminate the guarantee it provided for the bank loan of RMB1.1 billion and incur cost savings of RMB90 million approximately. Bazhou Seamless is expected to reach effective production under the coordination of the local government, and Wuxi Seamless is expected recover its accounts receivable gradually.
About WSP Holdings Limited
WSP Holdings develops and manufactures seamless Oil Country Tubular Goods (OCTG), including seamless casing, tubing and drill pipes used for on-shore and off-shore oil and gas exploration, drilling and extraction, and other pipes and connectors. Founded as WSP China in 1999, the Company offers a wide range of API and non-API seamless OCTG products, including products that are used in extreme drilling and extraction conditions. The Company’s products are used in China’s major oilfields and are exported to oil producing regions throughout the world. For further information, please visit WSP Holdings’ website at http://www.wsphl.com/.
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