Honghua (196.HK) Entered into an Agreement with ASIFL

Tuesday, 27 June 2017, 08:16 HKT/SGT

Exploring Market through Finance Leasing and Value-added Services

HONG KONG, June 27, 2017 - (ACN Newswire) - Honghua (Stock Code: 196.HK), a leading global land drilling rig manufacturer, is pleased to announce that its indirect wholly owned subsidiary, Sichuan Honghua, signed the Sale and Purchase Agreement ("Agreement") with Aerospace Science & Industry Financial Leasing Co., Ltd. ("ASIFL"), a connected person of Honghua, on six sets of top drive drilling systems at a total consideration of RMB 33,220,000. On the same day, Shenzhen Honghua, an indirectly owned subsidiary of Honghua, entered into the Finance Lease Agreement with ASIFL, pursuant to which ASIFL leases the Equipment to Shenzhen Honghua for 5 years at a total consideration of RMB 37,252,527.93.

It is also said that, these Equipments will be eventually be made available,via Honghua, on an operating lease basis to one of the subsidiaries of PetroChina, Sinopec and CNOOC for domestic oil and gas drilling projects.

Honghua believes the sale of the Equipments will generate immediate sales income for the Company in the current financial period. The Finance Lease Agreement will also allow the Group to introduce capital from ASIFL through the platform of Shenzhen Honghua.

Mr Chen Yajun, Chairman of Honghua commented, "These transactions represent an effort of Honghua to establish a new financing channel with ASIFL and raise capital at relatively low cost, in order to expansion in domestic and foreign oil and gas equipment market under fluctuating oil price. The corporation between Honghua and ASIFL comes as a result of the great support from China Aerospace Science and Industry Corporation as Honghua's major shareholder, as well as a business model innovation between both parties. Base on the success of this transaction, there will be more operating finace leasing corportaions for oil & gas equipments in the future. Enjoying the synergy effect from the alliance, Honghua will capturing more opportunities by offering finance leasing and other value added services at the beginning of oil and gas industry recovery, and create more value for shareholders. "

About Honghua Group Limited (Stock Code: 196.HK)
Honghua is one of the largest land drilling equipment manufacturers in the world, which is primarily engaged in manufacturing conventional land drilling rigs, digital drilling rigs, accessories of drilling rigs, as well as the parts and components for the drilling rigs or for the maintenance of the drilling rigs in operation. Leveraging on the strong R&D strength, high-quality production facilities and mature international sales network, Honghua's 80% products have been sold to a large number of famous enterprises all over the world, including major oil-production regions such as North America, Middle East, and emerging markets including South America, India, Russia, China and Africa. In 2015, Honghua gradually delivered its first self-developed "Tiger" series drilling ships in domestic market manufactured in its Qidong offshore equipment production plant. At the same time, Honghua also put more efforts in clean energy sector focusing on LNG business. Based on the existing solid foundation of the land drilling rigs equipment, Honghua will implement diverse development strategies, and expand to become the integrated enterprise which is involved in the interaction development of onshore and offshore areas and three major sectors, including equipment manufacturing and oil and gas resources development (especially the unconventional oil and gas area), as well as engineering services.

Topic: Press release summary Sectors: Daily Finance, Energy, Alternatives, Daily News
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