China & USA
China Natural Gas, Inc. a provider of pipeline natural gas for industrial, commercial and residential use and compressed natural gas (CNG) for vehicular fuel in Xi’an, China, has closed the first round of a $40 million debt financing with Abax Lotus, an affiliated entity of Abax Global Capital ("AGC).
Qinan Ji, Chief Executive Officer and Chairman of the Board of the
Company, stated "We are very pleased to have entered into the financing
agreement with Abax Lotus. This capital will allow us to strengthen our
leadership position in China in-line with our strategic growth
initiatives, especially our LNG plans. We are also pleased to have Abax
Global Capital’s support and look forward to the contribution the firm
will make as an experienced investor."
The net proceeds from the offering will be used for the construction of
the Company’s previously announced LNG processing facility in the
Shaanxi Province and for the construction and acquisition of additional
CNG filling stations throughout Xi’an and other regions of China.
Donald Yang, President of AGC, stated, "We are confident our investment
in China Natural Gas will allow the Company to implement its business
initiatives and maintain its robust growth trajectory. We look forward
to continuing our working relationship with the Company."
Pursuant to the terms of purchase agreement, the Company issued to AGC
5% Guaranteed Senior Notes due 2014 in the principal amount of RMB 145
million (approximately $US20 million) and seven-year warrants
exercisable for up to 2.9 million shares of the Company’s common stock
at an initial exercise price of US$ 7.3652 per share, which represents
a 20% premium to the volume weighted average price for the 15
consecutive trading days ending January 28, 2008. In addition, the
Company will issue to AGC an additional 5% Guaranteed Senior Notes due
2014 in the principal amount of RMB 145 million (approximately $US20
million) on or before March 3, 2008 subject to the Company meeting
certain closing conditions. The Company has also granted AGC an option
to purchase up to RMB 73 million (approximately $US10 million) in
principal amount of its 5% Guaranteed Senior Notes due 2014.
In connection with the sale of the Senior Notes, the Company will enter
into an indenture agreement, which requires the Company to pay
additional interest at the rate of 3.0% per annum if the Company has
not obtained a listing of its common stock on the Nasdaq Global Market,
the Nasdaq Capital Market or the New York Stock Exchange one year from
the date of issuance and maintained such listing continuously
thereafter as long as the Senior Notes are outstanding.
The Company will also enter into an investor rights agreement, a
registration rights agreement covering the shares of common stock
issuable upon exercise of the warrants and a share pledge agreement.