Corporate Bonds Issued for Acquisition

The company plans to acquire an 11.24% stake, worth RMB 97.89 mln in Inner Mongolia Sulige Natural Gas Chemical Co., Ltd., currently held by Inner Mongolia Boyuan Investment Group Co., Ltd., a major shareholder of the company, following which, Sulige Natural will be a wholly-owned subsidiary of the company with its future total investment totaling RMB 300 mln. However, the company will issue corporate bonds for the acquisition, with a value of up to RMB 500 mln.

Sulige Natural currently has an annual production of 0.18 mln tons of methanol from natural gas, of which the figure will reach 0.33 mln tons once its technological reform is completed.

In November 2005, following an equity swap, the company held a 88.76% stake in Sulige Natural, established in July 2004. As of 30 Jun 2008, the book value of Sulige Natural had reached RMB 676 mln while its net assets were valued at RMB 196 mln and their appraised value reached RMB 870 mln.

The company expressed that the acquisition would improve its asset integrity and is in compliance with its development strategy of transforming the energy industry. Moreover, as Sulige Natural is an important profit contributor of the company, the acquisition could improve the debt structure of Sulige Natural and enhance the profitability of both parties.

The corporate bonds can be allotted to the company's shareholders with a maturity of between three and five years, of which the raised funds, excluding the amounts for asset acquisition and capital increase, will be used to supplement the company’s working capital.


Source: Securities Times

Date: 13 Aug 2008

CN01/RL/JL/BT/KM