Sinoenergy Divestment

RNS Number : 6535G

Green Dragon Gas Ltd

16 May 2011

 



16 May 2011

GREEN DRAGON GAS LTD

("Green Dragon" or "the Company")

Capital Discipline Results in Sinoenergy Divestment

Green Dragon Gas Ltd. (AIM: GDG), one of the largest independent companies involved in the production of CBM gas and the distribution and sale of wholesale gas in China, announces that it has acquired Pingdingshan Sinoenergy Gas Co Ltd ("PSG") and has concurrently been repaid its investment in Sinoenergy Corporation ("Sinoenergy") having elected not to proceed with this acquisition.

The investment of US$34.7 million in Sinoenergy was announced in October last year and required the completion of a corporate reorganisation of Sinoenergy prior to completion. However the required reorganization failed to complete and Green Dragon elected to divest its interest.  Under the terms of the divestment Green Dragon has been repaid a total of US$37.9 million (including US$ 2.8 million in interest), representing a 13% return (annualised) on capital.

As part of this transaction, Green Dragon has acquired PSG, a subsidiary of Sinoenergy, which owns and operates two CNG retail stations strategically located in Henan. These CNG retail stations synergistically get their gas supply from Green Dragon's Midstream Distribution station in Zhengzhou.

Randeep Grewal, Chairman, CEO and Founder, commented:

"We were clear with Sinoenergy on the required reorganization of the corporate entity to give us comfort in converting the investment into an equity relationship which was not accomplished timely as required. The Company has been repaid in full plus interest with a 13% return and acquired the CNG stations in Henan which are synergistic to our own gas production. We are very pleased with this outcome and wish Sinoenergy continued success in their business."

"Green Dragon Gas has a clear vision and strategy to build a significant China CBM upstream business complemented by a substantial gas distribution network supported by proprietary technology. We are committed to executing this strategy with a disciplined capital approach.  The opportunities that exist to add business units to complement the Company's first mover advantage in monetising its upstream assets remain paramount to the Company. We are currently conducting due diligence on such an opportunity."

For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact:

Stephen Hill / Betty Cheung Green Dragon Gas	[phone]
Dr Azhic Basirov / David Jones Smith &Williamson - Nomad & Broker	[phone]
Tim Redfern / Anu Tayal / Adam James Evolution Securities - Broker	[phone]
Paul Connolly / John Dwyer / Steve Baldwin Macquarie Capital (Europe) - Broker	[phone]
Judith Rawnsley CLSA - Broker	[phone]
James Henderson / Phillip Dennis Pelham Bell Pottinger - Investor Relations	[phone]

 

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