Shenzhen-listed Sainty Marine has been stripped of the qualification for the takeover of insolvent Nantong Mingde Heavy Industry (NMHI) on financial grounds.
The receiver of NMHI has also revoked the right of Sainty Marine to manage NMHI during its restructuring, a stock filing of Sainty Marine said on 9 July.
Sainty Marine lacks the ability to fund the restructuring of NMHI, as the company currently faces financial hardships, the receiver added.
Sainty Marine, the single largest creditor of NMHI, is seeking to take over the insolvent yard.
NMHI has entered into court receivership since Sainty Marine applied for the bankruptcy restructuring of NMHI in December 2014.
Sainty Marine has been in co-operation with NMHI to sell newbuilds built by NMHI since 2013. As of end of 2014, Sainty Marine provided NMHI with a total of net CNY2.5 billion (USD403.2 million) to finance the newbuildings under construction at NMHI, making Sainty Marine the single largest creditor of the Nantong yard.
Sainty Marine discovered by the end of 2014 that NMHI was unable to repay the funds as the company had predicted.
Sainty Marine will also try to expand its channels of financings to resolve the loan defaults.