Longwei Petroleum Provides Shareholder Update
TAIYUAN CITY, China, Oct. 30, 2012 /PRNewswire/ -- 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"), announced it has extended the expiration date of its October 29, 2009 financing warrants (the "Warrants") by one month from October 29, 2012 to November 29, 2012 to account for the NYSE closure on the original expiration date.
Longwei previously completed a private placement financing, principally with institutional investors, on October 29, 2009, for approximately $14.8 million to provide inventory financing for its then newly acquired Gujiao facility. At the time of the financing, the Company issued a total of 14.8 million Warrants exercisable at $2.255 per share. These investors have subsequently exercised approximately 3.6 million Warrants, and a total of 11.2 million Warrants are currently outstanding. The Warrants were originally issued with a three-year term and were registered to be exercised "for cash" under the Company's Form S-3 Registration Statement effective February 18, 2011.
On September 26, 2012, the Company completed the purchase of the Huajie assets, a fuel storage depot in northern Shanxi Province with a 100,000-metric-ton storage capacity, for a total acquisition price of approximately $110.6 million. "We were pleased to have closed on the Huajie asset purchase using our own cash resources without dilution to our shareholders, and as of October 11, 2012, we are now operational at the facility," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "We expect meaningful revenue contribution from Huajie beginning in the second half of our fiscal year ending June 30, 2013 as we ramp up our operations and sales efforts. Based on our experience during the Gujiao ramp-up phase during 2010, we are confident we can develop this new market quickly."Management has forecasted strong demand for its products from customers in the region and recently announced signed sales agreements with nine major regional industrial companies for its Huajie facility. As a result, the Company has received strong institutional investor interest in its business activities. The Company has also had ongoing dialog with its Warrant holders regarding the exercise of the Warrants based on the recent upward trend in the stock price. Because all of the U.S. stock markets were closed on both October 29, 2012 and today due to the influence of Hurricane Sandy (the first back-to-back shutdown for weather since 1888, according to Bloomberg), many Warrant holders, including several large institutions, contacted management prior to the Warrants' expiration and expressed frustration and discontent for not being able to exercise their warrants on the established expiration date. "We understand the disappointment of our long-term institutional shareholders for not being able to exercise their Warrants at a time when the Company is climbing to a fair valuation," said Mr. Cai. "We appreciate the patience of all of our shareholders as we have gone through a difficult period for all U.S.-listed Chinese companies. We think it is in the best interest of the Company and all of our shareholders to grant the short-term, one-month extension of the Warrants. At this time, our thoughts go out to those affected by the storm."
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