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Enjoying Continued Support from Sinopec Group
To Become the World Leading Oil Storage and Logistics Company
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HONG KONG, Dec 21, 2011 - (ACN Newswire) - Sinopec Kantons Holdings Ltd ("Kantons" or the "Company"; together with its subsidiaries (the "Group"); Stock Code: 934), is pleased to announce through its wholly owned subsidiary of the Company, Sinomart KTS Development Limited to sign an agreement of acquiring the equity interest in the Five Crude Oil Terminal Operators ("Five Joint Ventures") from China Petroleum & Chemical Corporation ("Sinopec Corp.") at an aggregate consideration of RMB1,809,807,300. The Company also proposed to raise capital by the way of rights issue in order to finance the acquisition and increase authorized share capital. The management of Kantons believes that the acquisition will help Kantons to achieve its strategy to become the world leading oil storage and logistics company.
Mr. Ye Zhi Jun, Managing Director of Kantons, stated, "With the rapid industrialization and urbanization development, China has already become the world's main driver of oil demand growth. Although the daily oil production in China has increased significantly, the amount is still far below the demand. Also the oil demand in China exceeded its own resources. China needs to import large quantities of oil in order to meet its huge demand. This rapid growth of oil demand will lead to a strong demand for crude oil terminal services. As a result, the Five Joint Ventures are in an advantageous position to benefit from China's rising foreign oil imports."
Upon completion of the Acquisition, the Five Joint Ventures will become jointly controlled entities of the Company under HKFRS. The number of crude oil terminal companies controlled or jointly owned by the Group will increase from two to seven, with the number of berths increasing from 14 to 24, of which nine berths will have the capacity to accept VLCC vessels. Annual design capacity will increase from approximately 85 million tonnes to approximately 225 million tonnes of crude oil. Mr. Ye also stated, "The Acquisition will help the Company to build up a framework in Northern, Southern and Western part of China. This will significantly increase the scale of the Group's crude oil logistics business. The Acquisition will facilitate the Company forming a framework for crude oil transmission in economic zones in northern and eastern China, thus substantially enhancing its market share in the crude oil logistics sector in the PRC."
As introduced by Mr. Ye, "In 2010, Kantons undertook the streamlining and transformation of the Group's businesses by way of cessation of the trading of certain petrochemical products in order to reallocate the Group's resources and build it into a world-class international oil storage and logistics company. Five Joint Ventures offer crude oil jetty services that complement the existing major business segments of the Group. Business activities of Five Joint Ventures take place around the terminals situated around the Bohai Economic Rim and the Yangtze River Delta, and also extend to refineries in Hubei, Anhui, Henan, Jiangxi and other provinces. Their strategic geographical distribution has long-term advantages. Kantons will benefit from the increase in oil demand due to the economic boost in China. Three of the five joint ventures recorded profit and as once Rizhao Shihua, Tangshan Caofeidian Shihua and Ningbo Shihua's 450,000-tonne crude oil terminal become fully operational, the future revenue and profitability will also be enhanced."
Regarding on the acquisition, Mr.Ye concluded, "The Acquisition will significantly increase the scale of the Group's crude oil logistics business and will substantially enhance the Group's position to become the primary crude oil terminal platform in China. It will also increase the scale and strengthen the competitive advantage of company's core business. As a result, with the support of China Petrochemical Corporation, Kantons will continue to explore further acquisitions of crude oil logistics asset, enhance the Company's operation and management of the crude oil terminal assets and get the Company well prepared for the future development."
Please refer to the announcement and circular published on the Hong Kong Stock Exchange and the company website for more detail information regarding on the acquisition and rights issue.
Topic: Merger & Acquisition
Source: Sinopec Kantons Holdings Limited
Sectors: Gas & Oil, Daily Finance, Daily News
https://www.acnnewswire.com
From the Asia Corporate News Network
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