Anhui natural gas deal propels China Oil stockadmin
Shares of China Oil and Gas Group (0603) surged as much as 50 percent Friday after it announced it has agreed to buy Vast China Group, which has won approval to invest in, construct and operate a natural gas station in Maanshan, Anhui province.
The company said it agreed to buy the entire stake in Vast China Group, held by China Oil and Gas chairman Xu Tieliang, for HK$196.3 million.
Under the agreement, it will issue 400 million consideration shares at 24 HK cents per share, a 27.27 percent discount to the closing price of 33 HK cents per share on the last trading day, December 11.
Net proceeds of the issue are expected to total HK$96 million.
The company will also issue HK$90 million in convertible bonds and use HK$10.3 million in cash to fund the acquisition.
Maanshan-based Anhui China Oil, a Sino-foreign joint venture 60 percent owned by Vast China and 40 percent held by China Petroleum Pipeline Urban Gas Investments, has obtained approval to invest in, construct and operate natural gas stations in Maanshan. It has a 20-year permit of operation to engage in the natural gas stations business.
“Maanshan is a city widely praised for its green and clean environment by virtue of the government’s emphasis on, and efforts in, environmental protection along with the rapidly growing economy,” China Oil and Gas chairman Xu, who owns 12.74 percent in the company, said in a statement. His stake in China Oil and Gas will increase to 33.26 percent after the issuing of consideration shares and convertible bonds.
“Natural gas is encouraged and supported by the government due to its clean and affordable nature as an alternative energy to coal and petroleum,” Xu added.
China Oil and Gas shares leaped as much as 50 percent Friday, closing at 42.5 HK cents, up 28.79 percent from the last trading day and 87.5 percent from their issue price.
The company said in the statement to the Hong Kong stock exchange that it will focus its efforts on seeking more investment opportunities in the energy sector, especially in natural gas and related investments.