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Sale allows Fortune Oil to lift stake
December 18, 2012, Tuesday
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Print Edition
Print Edition
FORTUNE Oil Plc yesterday said it would sell its natural gas business to China Gas Holdings Ltd for US$400 million, giving it the option to raise its stake in the Chinese firm and remain invested in the high-demand energy sector in the world's second-largest economy.
Fortune Oil held an 18.4 percent stake in China Gas as of November 16, primarily through a joint venture formed last year with one of the company's founders.
China Gas, which sells liquefied petroleum gas and piped gas to residential and commercial users in China, will pay Fortune Oil US$200 million in cash on completion of the deal and a further US$200 million as deferred consideration.
London-listed Fortune Oil said it could elect to receive the deferred consideration in China Gas shares. A higher stake in China Gas could also potentially give it a say in the management of the company.
China is moving to double the share of gas in its overall energy supply to more than 8 percent by 2015, when consumption is forecast to reach 260 billion cubic meters.
"The company intends to be a long-term shareholder in China Gas so as to benefit from the potential growth in this sector in China over the medium term," Fortune Oil said.
The deal is part of an asset restructuring at China Gas.
Net proceeds from the deal would be used to reduce debt, Fortune Oil said in a statement.
Revenue from Fortune Oil's natural gas business was 59 million pounds (US$95 million) last year.
Fortune Oil held an 18.4 percent stake in China Gas as of November 16, primarily through a joint venture formed last year with one of the company's founders.
China Gas, which sells liquefied petroleum gas and piped gas to residential and commercial users in China, will pay Fortune Oil US$200 million in cash on completion of the deal and a further US$200 million as deferred consideration.
London-listed Fortune Oil said it could elect to receive the deferred consideration in China Gas shares. A higher stake in China Gas could also potentially give it a say in the management of the company.
China is moving to double the share of gas in its overall energy supply to more than 8 percent by 2015, when consumption is forecast to reach 260 billion cubic meters.
"The company intends to be a long-term shareholder in China Gas so as to benefit from the potential growth in this sector in China over the medium term," Fortune Oil said.
The deal is part of an asset restructuring at China Gas.
Net proceeds from the deal would be used to reduce debt, Fortune Oil said in a statement.
Revenue from Fortune Oil's natural gas business was 59 million pounds (US$95 million) last year.
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