Sinoenergy Corporation (Sinoenergy), a manufacturer of compressed natural gas (CNG) vehicle and gas station equipment and a designer, developer and operator of CNG filling stations in the People’s Republic of China, has signed a purchase agreement to acquire Giant Power International Limited (GPI) for $US8.75 million. The Company signed a separate purchase agreement to acquire Qingdao Shan Yang Tai Chemistry Resources Development Co., Ltd. (QSYT) for $US5.33 million.
GPI is a Hong Kong based holding company that invests in CNG processing
and wholesaling businesses located in China. Jointly with PetroChina
Hengran Petro-Gas Company Limited (Hengran), GPI invested in four CNG
processing and wholesaling businesses in the cities of Zhengzhou in
Henan province, Wuhu in Anhui province, and Nanjing in Jiangsu
province, each of which owns a large- scale CNG wholesale processing
plant. Three of the processing plants are operating. The fourth
processing plant is waiting for final licensing, and expects to begin
operations soon. GPI directly or indirectly owns stakes ranging from 9%
to 35% in these four processing and wholesaling businesses. China
Petroleum Corporation (PetroChina) owns 20% of Hengran.
Each of the three operating plants has a 20-year natural gas supply and
distribution contract with PetroChina. Based on their current daily
natural gas handling capacity of 300-350 thousand cubic meters, these
three operating plants are capable of handling 114 million cubic meters
of natural gas per year.
According to the terms of the purchase agreement, to be implemented
within a month, the sellers, who are GPI’s previous shareholders,
guaranteed that Sinoenergy will receive RMB 8 million ($US1.1 million)
in after tax income in 2008.
"Sinoenergy’s acquisition of GPI provides us with access to natural gas
resources as well as direct returns on equity investments in several
existing large-scale and profitable CNG processing plants," said Mr. Bo
Huang, CEO of Sinoenergy Corporation. "Sinoenergy will participate in
operating CNG processing plants, which will help us strengthen our
relationship with CNG suppliers. This relationship is important because
Sinoenergy is building CNG retail filling stations in Xuancheng City,
Pingdingshan City, Nanjing City and other markets which are covered by
GPI’s four CNG processing plants."
Sinoenergy also entered into an agreement, to be implemented by the end
of January, to acquire QSYT, a Chinese and Japanese joint venture.
QSYT’s only asset is a 1.1 million square foot plot of land with a
35,067 square foot unfinished plant on it. "Through the acquisition of
QSYT, we obtained an ideal manufacturing site for our pressure
container business, which we will relocate from downtown Qingdao,"
commented Mr. Huang. "We will soon begin to examine the various ways
through which we can dispose of our property in downtown Qingdao."