Longwei Petroleum Completes $110.6 Million Purchase Of Huajie Petroleum Assets
TAIYUAN, China, Sept. 27, 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 has finalized the US $110.6 million 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.
Longwei has acquired the assets of Huajie for a total purchase price of RMB 700 million (approximately US $110.6 million). The Company has made a final payment of RMB 150 million (approximately US $23.7 million) to the seller and released the previously paid deposit of RMB 550 million (approximately US $86.9 million) to complete the purchase.
"Closing on the Huajie facility allows us to increase our regional presence and attract new customers," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "We are pleased to have closed on the Huajie asset purchase using our own cash resources without dilution to our shareholders."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 north of Taiyuan. Longwei engaged a third-party, independent valuation firm for an appraisal of the fair market value of the assets acquired. The independent valuation firm provided its report with a detailed list of assets acquired and a valuation of approximately RMB 730 million (approximately $115.3 million). The Company was previously able to lock in the purchase price of RMB 700 million for Huajie based on the large deposit advanced. "The Company has recently completed three major milestones as promised to our shareholders," said Michael Toups, Chief Financial Officer of Longwei. "We have successfully completed the reconciliation of our PRC tax filings to our SEC filings showing no material difference in our reported numbers, completed our annual 10-K filing on-time with record revenues and net income, and completed the Huajie asset purchase with no dilution to our shareholders. We believe management has proven we remain committed to building long-term value for our shareholders."
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