China New Energy may buy stake in Harbin bio-refinery for USD 25m

Dec 20, 2013 - China New Energy Ltd (LON:CNEL), or CNE, said Wednesday it might acquire for CNY 150 million (USD 25m/EUR 18m) a 75% stake in Harbin China Distillery Co Ltd, the owner of a 60,000-tonne-per-year ethanol plant in China.

CNE has signed a memorandum of understanding under which it is to take over BAPP Ethanol Holdings Ltd -- a unit of Sino Distillery Group Ltd (HKG:0039) that after a planned restructuring will hold the 75% interest in the bio-refinery. The successful completion of the said restructuring is a key condition for the acquisition deal. A Chinese state-controlled company based in the city of Harbin holds the remaining 25% stake in Harbin China Distillery.

The transaction is in line with CNE’s efforts to diversify its business by entering the biorefinery operation segment. At present the company offer engineering, procurement and construction (EPC) services to bioethanol and biobutanol projects and holds the rights to an energy efficiency technology and second generation cellulosic biofuel production technology. The buy will also bring a valuable recurring revenue stream and the opportunity to build a commercial-scale cellulosic biofuel production facility, said the buyer’s chairman Weijun Yu.

CNE intends to issue shares and convertible bonds to Sino Distillery to satisfy the acquisition consideration of CNY 150 million. The terms of the formal deal are subject to due diligence by CNE and additional negotiations. The two sides plan to finalise these terms in three months.

(CNY 10 = USD 1.647/EUR 1.207)

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