On 2 Dec., 2013, Anhui Huaxing Chemical
Industry Co., Ltd. (Anhui Huaxing) claimed that it has cosigned an
agreement——Attaching condition precedent of Share Acquisition Contract with
CEFC Shanghai Oil Group Co., Ltd. (CEFC Shanghai), Shanghai Daiwah Group
International Trade Co., Ltd. (Shanghai Daiwah Group) and Dasheng Commercial
Co., Ltd. (Dasheng Commercial) on 29 Nov., 2013.
The agreement stipulates that Anhui Huaxing
will respectively non-publicly issue an additional 80 million shares, 180
million shares and 100 million shares to CEFC Shanghai, Shanghai Daiwah Group
and Dasheng Commercial at the price of about USD1.00/share (RMB6.11/share).
Anhui Huaxing will receive a total of USD358.83 million (RMB2.20 billion) from
these three companies.
Before the deal, Anhui Huaxing's controlling
shareholder is CEFC Shanghai with 60.78% stake, and its actual controllers are
three natural persons, namely Su Weizhong, Zheng Xiongbin and Sun Ye. After the
deal, Anhui Huaxing's controlling shareholder and actual controllers will not
change. CEFC Shanghai will hold a 51.88% stake, but Shanghai Daiwah Group and
Dasheng Commercial will become Anhui Huaxing's shareholder, with 11.55% and
6.41% stakes respectively.
If the deal is completed, Anhui Huaxing
claimed that the raised funds will be used to supplement its liquidity after
deducting the issuance cost. Anhui Huaxing will then use this liquidity to
carry out the preparatory work for engaging in the natural gas business.
Specifically, Anhui Huaxing will invest huge
funds into its wholly-owned subsidiary——CEFC Natural Gas (Shanghai) Co., Ltd.
(CEFC Natural Gas) to enable it to engage in the natural gas business. Thus,
CEFC Natural Gas will be able to carry out team building, qualification
application, project bidding and cooperation negotiation, etc.
Notably, CEFC Natural Gas was not founded by
Anhui Huaxing. Anhui Huaxing's 100%
stake was freely transferred to Anhui Huaxing by its parent company——CEFC
Shanghai on 12 July, 2013. When the 100% stake was transferred, CEFC Natural
Gas's total assets and net assets both were about USD46,650 (RMB286,000), and
its total liabilities was USD0.
Pesticides is Anhui Huaxing's main business
at present, but natural gas will likely become Anhui Huaxing's other main
business. In the natural gas sector, Anhui Huaxing's ultimate aim is to form a
complete natural gas industry chain with upstream and downstream integration.
Regarding its permits and qualifications,
Anhui Huaxing claimed that CEFC Natural Gas currently only holds the
qualification for natural gas entrepot trade. However, CEFC Natural Gas is
actively applying for other qualifications to carry out more business related
to natural gas.
Anhui Huaxing plans to carry out the natural
gas overseas entrepot trade business and import business, aiming to open up the
international and domestic natural gas markets.
Anhui Huaxing intends to establish long-term
and stable natural gas purchase relationships with oil companies located in the
Middle East, North America, Central America, Central Asia, such as Israel
National Oil Company, Petroleos Mexicanos, PetroKazakhstan, etc. Also, Anhui
Huaxing intends to establish strategic cooperation relationships with some
domestic large state-owned energy and power companies.
Anhui Huaxing intends to gradually set foot
into the exploration of overseas natural gas, and to construct large-scale
liquefied natural gas filling stations and storage warehouses domestically.
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