China Gas sells 4.8pc stake to ADB for US$24m

PUBLISHED : Friday, 01 September, 2006, 12:00am
UPDATED : Friday, 01 September, 2006, 12:00am

Deal part of US$149m package to fund company's projects

China Gas Holdings, the mainland municipal gas distributor, sold a 4.88 per cent stake to the Asian Development Bank for about US$24 million as part of a package that will pump US$149 million in fresh capital into the company.

The company said the ADB, the multilateral institution that funds development projects throughout the region, will purchase 150 million new shares at HK$1.25 each, or a 3.87 per cent discount to Wednesday's closing price of HK$1.29.

The ADB also agreed to provide a US$50 million loan to help fund China Gas projects and to help arrange a US$75 million syndicated loan from international banks.

Over the past 3? years, China Gas has raised US$320 million through nine equity deals and four debt financings, and obtained a 20 billion yuan credit facility from mainland policy bank China Development Bank.

It has 54 municipal piped-gas projects in the mainland, a number that is expected to grow to 60 by March 31 next year.

The company plans capital spending of as much as 1.5 billion yuan this year, rising to 1.8 billion yuan next year.

It had HK$2.27 billion worth of bank loans and convertible bonds outstanding as of March 31, equal to 107 per cent of its total equity.

The company has said since January that it would not sell more new shares in order to avoid diluting the holdings of existing shareholders, a pledge company officials repeated even as they unveiled the new sale.

'With our cash and credit facilities, we will not raise more funds by issuing equity,' chief financial officer Eric Leung said. The ADB deal, he said, had been under discussion for 18 months and only came to fruition this week.

China Gas' list of shareholders has expanded from a couple of founding investors including managing director Mr Liu and Hai Xia Finance, the investment company of the State Council's Taiwan Affairs Office, to include fund managers and oil and gas firms such as China Petroleum & Chemical (Sinopec), GAIL of India, Oman Oil, Templeton Asset Management, the Netherlands' international development bank FMO and Proparco, a French development bank.

Trading in China Gas shares will resume today after being suspended yesterday.