Longwei Petroleum To Complete Purchase Of Huajie Petroleum Assets By The End Of September
TAIYUAN CITY, China, Sept. 24, 2012 /PRNewswire-FirstCall/ -- Longwei Petroleum Investment Holding Ltd. (NYSE MKT: LPH) ("Longwei" or the "Company"), an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China ("PRC"), today announced that it will complete the purchase of the assets of Huajie Petroleum Co., Ltd. ("Huajie"), a fuel storage depot in northern Shanxi Province with a 100,000-metric-ton storage capacity, by the end of this month.
Longwei will acquire the assets of Huajie for a total purchase price of RMB 700 million (approximately US $110.6 million). The Company has agreed with the seller that the final payment of RMB 150 million (approximately US $23.7 million) will be paid on or before September 30, 2012. The Company currently has paid RMB 550 million (approximately US $86.9 million) on deposit for the purchase.
"We are pleased to close on the Huajie asset purchase without dilution to our shareholders," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "We have chosen to move forward at this time to use our own cash to close on the purchase and put our capital to work now at the new facility."
The Huajie assets are located in Xingyuan Township, Fanshi County (south of the main train station) in northern Shanxi Province, PRC. The assets include fuel storage tanks with a 100,000-metric-ton capacity with accessory facilities and equipment, delivery and distribution platforms, including a dedicated rail spur and a vehicle loading and unloading station. The purchase also includes a 3,000-square-meter office building and land use rights for 98 acres of land adjacent to the main regional rail line. The new facility is in a growing industrial and mining region, approximately 200 kilometers to the north of Taiyuan."We have been balancing our working capital to take advantage of petroleum pricing opportunities in the market, as well as balancing the funding required to complete the Huajie purchase," said Michael Toups, Chief Financial Officer of Longwei. "Based on our inventory management and first fiscal quarter 2013 cash flow, we are confident to close the Huajie asset purchase at this time. We were exploring financing options available to us, but decided the economics were not right at this time." Cai Yongjun, Chairman and Chief Executive Officer of Longwei, stated, "This acquisition nearly doubles our storage capacity to a total of 220,000 metric tons and extends our reach into the fast-growing industrial area of northern Shanxi Province. With the addition of the Huajie facility, we have strengthened our lead as the largest non-state-owned fuel storage and distribution business in the province and are better positioned to capitalize on the demand for petroleum products in our regional market."
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