Brightoil Petroleum (Holdings) Limited, one of the largest service providers of marine bunkering in China, has entered into a Memorandum of Understanding (MOU) with vendor
Tooltime Holdings Limited for the acquisition of the entire issued share capital of, and a shareholder's loan due by target company
Access Wealth Holdings Limited at an aggregate consideration of HK$1,485 million.
Sixty-five percent of the consideration will be settled by cash and the remaining 35 percent will be settled by issuing of new shares. The formal agreement is due to be signed upon the completion of a due diligence review within two months.
Pursuant to the MOU, Tooltime has undertaken that the net profit after taxation of Access Wealth Group for the period commencing from 1 July 2010 and ending on 30 June 2011 shall not be less than HK$300,000,000.
Dr.
Sit Kwong Lam, Chairman and CEO of Brightoil said, "The acquisition of Access Wealth at a consideration of HK$1,485 million, or equivalent to the Guaranteed Profit at a P/E ratio of 4.95 times, not only ensures stable income contribution to Brightoil Petroleum in the future, but also enables the group to tap into the oil refining sector that yields higher margin. This business operation will also integrate with the other four core businesses, which help develop Brightoil Petroleum into a highly integrated global energy conglomerate."
Golden Sea (Zhenjiang) Petrochemical Ltd. is a wholly-owned subsidiary and the major asset of Access Wealth. The company is principally engaged in a number of operations, including the refining and sale of fuel oil and asphalt, the operation of storage depots for petroleum products and the production, processing and sale of naphtha.
Golden Sea is also understood to have obtained all the necessary operating licenses for the manufacturing and sale of petrochemical products in China.
Golden Sea has two oil terminals that can accommodate oil tankers with sizes ranging from 500 dwt to 50,000 dwt, together with a 138,000 cubic metre (cbm) oil depot and the land use right for adjacent land and coastline.
Upon completion of the acquisition, Brightoil plans to expand the storage capacity of the existing oil depot to 600,000 cbm, and to build two additional berths at the terminal, as part of its strategy to generate profit growth.
The oil depot will also become the base of oil supply for Brightoil in the Yangtze River Delta region, with the service scope covering every major port along Yangtze River, and provide marine fuel to vessels whilst also optimizing the group's bunkering network in China.
Brightoil Petroleum is constructing a large-scale oil depot terminal at
Waidiao Island, Zhoushan City, which will be connected to Golden Sea's oil depot in
Zhenjiang via the Eastern China Oil Pipelines.
The group will then be able to import crude oil and fuel oil through the 300,000 dwt oil terminal in
Zhoushan and send to the oil depot at Zhenjiang for refining.
Dr. Sit continued, "The acquisition of Golden Sea can generate remarkable synergies with its oil refining business and the group’s storage and terminal facilities in Zhoushan. On the other hand, as the second largest fuel oil supplier in China in 2009, Brightoil Petroleum can significantly increase the import volume for fuel oil upon completion of the acquisition, so as to reduce procurement cost and increase our bottom line growth."
"With the promulgation of the "New 36 Articles" by the State Council, which encourages private enterprise and private capital to invest in the oil and gas sector, Brightoil Petroleum actively responds to the government's new policy. The group can take advantage of this favorable national policy to further extend its reach to oil refining industry, through crude oil and fuel oil importing as well as development of advanced petrochemical processing business. This will expedite the integration of oil refining operation with the other four core businesses, namely global marine bunkering, oil storage and terminal, marine transportation as well as natural gas development and production, and facilitate the establishment of an integrated value chain of upstream and downstream energy business," Brightoil said in a statement.
