Sinochem Fertilizer to boost Qinghai Salt Lake stake in 3.89b yuan deal
Sinochem Fertilizer plans to acquire a 15 per cent stake in Qinghai Salt Lake from Sinochem Corporation for 3.89 billion yuan (HK$4.92 billion), according to a filing by Sinofert Holdings to the Hong Kong stock exchange on Tuesday night.
Sinochem is a wholly owned subsidiary of Sinofert, while Sinochem Corporation is its controlling shareholder.
Sinochem Fertilizer currently owns 8.94 per cent of Qinghai Salt Lake, and after the acquisition its holding will increase to 23.95 per cent of the total issued share capital, making it the second-largest shareholder.
“The acquisition can enhance the efficiency of Sinochem Fertilizer’s management over Qinghai Salt Lake, maximise the value and use of the distribution network of Sinochem Fertilizer”, Sinofert said, adding that the deal would also improve its bargaining power in the mainland’s potassium fertilizer industry.
The company said it was considering “a number of options for financing the acquisition”, including internal cash resources and debt financing.
The price, 16.29 yuan per Qinghai Salt Lake share, represents 90 per cent of the 30-trading day average price of 18.10 yuan per share between August 20 and October 8.
Shenzhen-listed Qinghai Salt Lake is the largest potash producer on the mainland, with an annual production capacity of 3.5 million tonnes.
The company has the mining rights to Chaerhan Salt Lake in Qinghai province, which is the country’s largest potassium mine and has a potassium chloride reserve of 540 million tonnes, accounting for 97 per cent of the proven potassium chloride reserves in China.
Qinghai Salk Lake is also engaged in the production and sale of chlorine potassium, potassium sulfate and potassium carbonate, and the sale of potassium hydroxide.
