An Unexpected Twist

In a bizarre turn of events, New Century Shipbuilding (“NCS”) has canned its listing plans in Singapore on eve of pricing, citing tough market conditions. The Business Times in Singapore reported today that there is more to the sudden IPO pull-out than meets the eye. The largest privately owned shipbuilder in China is now accused of misleading investors through material inaccuracies contained in its prospectus. Quoting unnamed sources, a complaint made to the Singapore Exchange pointed out that the shipbuilder had failed to disclose that two shipbuilding contracts for Sino Noble worth USD 180 million had been terminated late last year and were wrongly listed as part of its outstanding orderbook. NCS had also failed to mention the legal claim amounting to USD 60 million that Sino Noble is currently claiming against the shipbuilder.

The company could face criminal action from the Monetary Authority of Singapore if found guilty of making false and misleading statements. According to its prospectus, its orderbook has an aggregate value of USD 5.2 billion as at 31 March 2010 and included orders for 83 vessels with a combined tonnage of approximately 10.8 million dwt to be delivered between 2010 and 2012. We are absolutely baffled by NCS’ non-disclosure in consideration that the two disputed contracts with Sino Noble accounted for only 3.5% of its total orderbook. There appear to be hardly sufficient reasons to place the IPO in jeopardy by not being transparent in this regard.

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