Panriver Investments Company, a wholly-owned subsidiary of Hongkong-listed Panva Gas Holdings Limited, has entered into a non-legally binding memorandum of understanding with Foshan Construction and Transportation Assets Management Company Limited and Foshan Gas Company for the possible acquisition of a 45% equity interest in Foshan Gas.
Panriver Investments will acquire from Foshan CTAM a 45% equity interest in Foshan Gas. The consideration to be paid by Panriver Investments will be based on 45% of the revalued net assets value of Foshan Gas as at May 31, 2003 plus a premium not exceeding an amount equivalent to 100% of the revalued net assets value of Foshan Gas on that date.
In a statement, Panva Gas said: “The consideration has not yet been determined at this stage as the revaluation of the Foshan Gas assets is currently being carried out but based on the preliminary valuation conducted by the company, the net assets value of Foshan Gas should be in the region of approximately RMB90 million (US$1=RMB8.27).
“Therefore the maximum consideration required to be paid for by Panriver Investments should not exceed RMB81 million, representing some 19.92% of the audited consolidated net tangible asset value of the Company as at December 31 2002.”
Foshan CTAM is owned and operated by the municipal government of the municipality of the city of Foshan, in China’s Guangdong province. Foshan Gas is 76% owned by Foshan CTAM with the remaining 24% held by staff of Foshan Gas.
Under the terms of the agreement, Foshan Panva Gas will be granted 50 years of exclusive operating rights to the city gas pipeline network in the city of Foshan. Established in 1993 and based in the city of Foshan, Foshan Gas was originally a department of the Foshan City Infrastructure Bureau which was incorporated as an unlimited liability company and renamed Foshan Gas in 1999.
Foshan Gas currently owns approximately 320 kilometres of gas pipelines supplying approximately 56,000 residential household customers, 23 industrial customers and 357 commercial customers at a piped gas penetration rate of approximately 27%. The company is also supplying to over 100,000 liquefied petroleum gas (LPG) cylinders users. Foshan Gas has a 76% market share in Foshan city.
Panva is engaged in the sale and distribution of natural gas and LPG in China.