3F Intends to Acquire Shanghai Coking & Chemical      

Shanghai 3F New Materials Co., Ltd. (3F, SH: 600636) announced on July 3rd that it will issue 647 million domestic shares to Shanghai Huayi (Group) Company Ltd.(Huayi), China CINDA Assets Management Corporation (China CINDA) and China Huarong Asset Management Corporation (China Huarong) for RMB9.59 per share. Around RMB6.2 billion to be raised will be used to acquire the 100% equity in Shanghai Coking & Chemical Co., Ltd.
   Huayi, China CINDA and China Huarong hold the 71.73%, 26.58% and 1.69% equity respectively in Shanghai Coking & Chemical. The deal is valued at RMB6.2 billion.
   3F is engaged in the production and sales of fluorine chemicals. Shanghai Coking & Chemical focuses on the coal chemical business. Upon completion of the deal, 3F will integrate fluorine chemical and coal chemical businesses and enhance its profit-earning ability.
   According to 3F, as the price of crude oil in the international market has been maintained at a high level, it is all the more essential to develop coal resources and ensure the long-term energy supply security in China. The production of chemical products through coal gasification has a bright development prospect. Huayi has already formulated a strategy of vigorously developing coal-based chemical products.
   Shanghai Coking & Chemical is a large state-owned chemical enterprise engaged in the coal chemical sector with clean coal technology. Major products include methanol, coke, acetic anhydride and industrial gases. The operating revenue in the company was RMB5.71 billion and the net profit was RMB230 million in 2007. The company owns a coke capacity of 1.20 million t/a and a methanol capacity of around 350 000 t/a. The 450 000 t/a methanol unit, under construction, will come on stream this August. Besides, a 600 000 t/a methanol unit will also be constructed in Wuwei site, Anhui province.
   With the acquisition, 3F will increase the net assets from RMB794 million to around RMB5.403 billion. Huayi will hold 3F's equity from 31.53% to around 58.54%. Huayi will make a better use of 3F platform to enhance its presence in stock market. An insider says that Wujing Chemical Co., Ltd. may also likely be merged into 3F.