SinoCoking Coal and Coke Chemical Industries, Inc., coal and coke processor in central China, making its operations through its British Virgin Islands-registered subsidiary Top Favour Limited, announced that its subsidiary Pingdingshan Hongli Coal & Coke Co., Ltd. entered into materially definitive agrement to acquire 60 per cent of equity interest of mining companies Baofeng Shuangrui Coal Co., Ltd. and Baofeng Xingsheng Coal Co., Ltd. The coalmines operated by these companies are located in Baofeng County, Henan Province. Total consideration of agreements is approximately US$12.4 million.
Under the terms of the agreements, SinoCoking Coal's subsidiary will pay the owners of each company an aggregate purchase price of US$6.2 million in cash, of which approximately US$1.5 million was a refundable deposit to examine the financials, licenses, and reserve data. Pingdingshan Hongli will keep current management and staff of both mining companies, and does not have plans to expand their production capacity, which eliminates the need for additional capital expenditures. The company will evaluate purchasing the remaining 40% minority interests in the future.
Mr. Jianhua Lv, Chairman and CEO of SinoCoking and the owner of Pingdingshan Hongli, said that the company is planning to continue to leverage its status as a coalmine consolidator in Henan Province, and expects to announce additional acquisitions in the quarter ending December 31, 2010.
