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| Sinopec Embarks on Privatization of Subsidiaries |
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China Petroleum and Chemical Corporation (Sinopec) announced in The privatization process, including a total capital of about 14.3 billion yuan (some US$1.8 billion), will last for 30 days from March 8 to April 6. A board meeting of Sinopec, held on February 15, approved the acquisition proposal of all the floating and non-floating shares of four A-shared listed subsidiaries of the company by way of cash offers. The offer price for acquiring Sinopec Qilu Petrochemical Company Limited, Sinopec Yangzi Petrochemical Company Limited, Sinopec Zhongyuan Petroleum Company Limited, Sinopec Shengli Oilfield Dynamic Group Company Limited is 10.18 yuan per share, 13.95 yuan per share, 12.12 yuan per share and 10.30 yuan per share respectively. According to Sinopec, the offer will become effective if the holders of floating shares of Qilu, Yangzi and Zhongyuan do not hold more than 10 percent of the total share capital, and the holders of floating shares of Sinopec Shengli do not hold over 25 percent of its total share capital by the last trading day of the 30-day period. Once the offer conditions become effective, Sinopec will facilitate the application to terminate trading in the floating shares of the four target companies, and complete the relevant delisting procedures. However, the offer will become ineffective if the required conditions are not met. Then, Sinopec will not accept shares of the four subsidiaries that have been acquired by the company and investors may suffer huge losses from trading on the market, said Sinopec. Market observers said that the price Sinopec had offered will enable the privatization process to run smoothly. According to Sinopec, the price represents a premium of 24.4 percent, 26.2 percent, 13.2 percent and 16.9 percent over the closing price of Qilu, Yangzi, Zhongyuan and Shengli respectively on February 7, 2006, the last day before they were suspended for the release of the offer. As the largest oil refinery of both The proposed merger can eliminate related party transactions and intra-group competition as well as consolidate and simplify management structure. It can improve efficiency within the company and bring values to shareholders of both sides, said Zhang Jiaren, CFO (chief financial operator) of Sinopec. The move, pouring more than 14 billion yuan into (Xinhua News Agency March 7, 2006) |
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