Fortune Oil Acquires Natural Gas, LNG Businesses
Fortune Oil has entered into an agreement with Everthriving Investment to acquire 65% of the share capital of 3 of its subsidiaries. Everthriving Investment is a privately owned Chinese LNG and Natural Gas business.
The total consideration payable for all 3 subsidiaries is an estimated initial payment of RMB 104.6 million (£9.71 million) and deferred payment of RMB 50 million (£4.64 million). One of the subsidiaries made a net profit of RMB 23.1 million (£2.14 million) on turnover of RMB 40.1 million (£3.72 million) in its last financial year.
The acquisitions will be effected via a newly incorporated wholly-owned subsidiary, Fortune Gas Technology Co., Ltd, and will be funded from the Company's existing resources.
These acquisitions represent a key development in the expansion of Fortune Oil's natural gas business. Everthriving's subsidiary businesses provide the Company with a broader portfolio of LNG refueling facilities, increased LNG transportation capabilities with the addition of 50 LNG trucks and improved technical capabilities in natural gas processing.
- Subscription for 65% of the shares of Beijing Everthriving Energy Technology Co., Ltd. ("Everthriving Energy Technology"), a company specializing in diesel oil to LNG "dual fuel" conversion technology, for an estimated initial payment of RMB 37.1 million (£3.44 million). The Company is targeting completion by 30 September 2010.
- Acquisition of 65% of Jinzhou Everthriving Logistics Co., Ltd. ("Everthriving Logistics"), a company specializing in the supply of LNG, for an estimated RMB 65 million (£6.04 million). The Company is targeting completion by 31 October 2010.
- Acquisition of 65% of Jilin Everthriving Carbon Dioxide Plastic Technology Co., Ltd ("Everthriving Plastics Technology"), a company specializing in natural gas processing, for an estimated RMB 2.5 million (£0.23 million). The Company is targeting completion by 31 March 2011.
- An additional deferred payment of RMB 50 million (£4.64 million) payable to Everthriving Investment upon certain material and long term milestones being met.
- Upon completion the Company will be entitled to 65% of the profits and capital of all 3 companies and will be entitled to appoint a majority of the board of directors and general managers.
Tee Kiam Poon, Chief Executive of Fortune Oil commented, "We are extremely pleased to have been able to forge this new relationship with Everthriving Investment Group. These strategic acquisitions add to our portfolio of LNG and gas projects and, particularly in the conversion technologies, will move Fortune Oil up the technology ladder, enhance our competitive advantage, and develop our capabilities."
Mr. Qian Benyuan, Chairman of Fortune Oil, commented, "We are thrilled with these acquisitions. These transactions today underscore Fortune Oil's commitment to partner with China in its unremitting effort to reduce carbon dioxide emissions along the Yangtze River. We take this partnership seriously and look forward to continuing to work with local governments in their efforts to tackle climate change by developing "clean energy" technology."
In each case the acquisition is subject to relevant Chinese approvals, satisfactory due diligence by Fortune Oil and the parties entering into formal acquisition documents, including joint venture agreements formally setting out the parties obligations with respect to each subsidiary following completion. The level and type of Chinese approvals required will vary with each of the transactions although it is anticipated that only local approval and registration of the subscription and transfer of the relevant shares will be required.
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