China Gas to Acquire Richland Gas for US$400 Million

China Gas issued an announcement early this morning confirming the acquisitions previously reported by the media: It will acquire Fortune Gas for US$400 million (approximately HK$3.1 billion). According to the announcement, the $400 million consideration will be paid in cash.

The two parties entered into a share purchase agreement on December 16. Under the share purchase agreement, Zhongfang may issue up to 250,000,000 consideration shares to Fudi pursuant to a special mandate to be approved by the shareholders at the special general meeting, which is equivalent to the enlarged issued China Gas. 5.19% of the share capital.

The company believes that the acquisition is in line with the Group's business strategy and expansion plan. The principal businesses of Fudi Gas include the distribution of gas, CBM (coalbed methane) and LNG (liquefied natural gas) marine vehicle refueling businesses in China. Richland Gas's operations in these three areas are at various stages of the chain (ie upstream, mainstream and downstream). The net asset value of Richland Gas as of December 31, 2011 (calculated on a consolidated basis) was approximately US$194 million.

Both China Gas's managing directors, Liu Minghui and Fudi China, have a 50% interest in the total issued share capital of CGGL. CGGL owns 419,478,000 shares and ** Guo Gas has a total issued shares of approximately 9.19%.

China Gas suspended trading on the Stock Exchange yesterday morning. The company said it will resume trading this morning.