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.
Table of Contents of Glyphsoate China Monthly Report 1312:
Sichuan Hebang to hold 90,000t/a PMIDA capacity
Anhui Huaxing to set foot into natural gas business
Shandong Binnong ranks sixth in 2013 China's Top 100 Pesticides Manufacturers List
Nutriechem tops 2013 China's Top 100 Pesticides Manufacturers List
Why should we be bullish on glyphosate-from supply perspective
Why should we be bullish on glyphosate-from demand perspective
Why should we be bullish on glyphosate-from inventory perspective
Nine glyphosate registrations in Nov. 2013
Glyphosate price declines in Dec. 2013
Export volume of glyphosate technical decreases by 16.66% in Oct. 2013