TAIYUAN CITY, China,
Oct. 30, 2012 /PRNewswire/ -- Longwei
Petroleum Investment Holding Ltd. (NYSE MKT: LPH) ("Longwei" or the
"Company"), an energy company engaged in the storage and
distribution of finished petroleum products in the People's Republic of China ("PRC"),
announced it has extended the expiration date of its October 29, 2009 financing warrants (the
"Warrants") by one month from October 29,
2012 to November 29, 2012 to
account for the NYSE closure on the original expiration
date.
Longwei previously completed a private placement financing,
principally with institutional investors, on October 29, 2009, for approximately $14.8 million to provide inventory financing for
its then newly acquired Gujiao facility. At the time of the
financing, the Company issued a total of 14.8 million Warrants
exercisable at $2.255 per share.
These investors have subsequently exercised approximately 3.6
million Warrants, and a total of 11.2 million Warrants are
currently outstanding. The Warrants were originally issued with a
three-year term and were registered to be exercised "for cash"
under the Company's Form S-3 Registration Statement effective
February 18, 2011.
On September 26, 2012, the Company
completed the purchase of the Huajie assets, a fuel storage depot
in northern Shanxi Province with a
100,000-metric-ton storage capacity, for a total acquisition price
of approximately $110.6 million. "We
were pleased to have closed on the Huajie asset purchase using our
own cash resources without dilution to our shareholders, and as of
October 11, 2012, we are now
operational at the facility," said Cai Yongjun, Chairman and Chief
Executive Officer of Longwei. "We expect meaningful revenue
contribution from Huajie beginning in the second half of our fiscal
year ending June 30, 2013 as we ramp
up our operations and sales efforts. Based on our experience during
the Gujiao ramp-up phase during 2010, we are confident we can
develop this new market quickly."
Management has forecasted strong demand for its products from
customers in the region and recently announced signed sales
agreements with nine major regional industrial companies for its
Huajie facility. As a result, the Company has received strong
institutional investor interest in its business activities. The
Company has also had ongoing dialog with its Warrant holders
regarding the exercise of the Warrants based on the recent upward
trend in the stock price. Because all of the U.S. stock markets
were closed on both October 29, 2012
and today due to the influence of Hurricane Sandy (the first
back-to-back shutdown for weather since 1888, according to
Bloomberg), many Warrant holders, including several large
institutions, contacted management prior to the Warrants'
expiration and expressed frustration and discontent for not being
able to exercise their warrants on the established expiration
date.
"We understand the disappointment of our long-term institutional
shareholders for not being able to exercise their Warrants at a
time when the Company is climbing to a fair valuation," said Mr.
Cai. "We appreciate the patience of all of our shareholders as we
have gone through a difficult period for all U.S.-listed Chinese
companies. We think it is in the best interest of the Company and
all of our shareholders to grant the short-term, one-month
extension of the Warrants. At this time, our thoughts go out to
those affected by the storm."
After considering the situation thoroughly and consulting with
the Company's legal counsel, the board of directors authorized this
decision in the best interest of the Company and its shareholders.
The Warrants have been extended under the same terms and conditions
until November 29, 2012.
"We believe the Warrant proceeds, if exercised, will be
beneficial to the Company as a means to grow our Huajie inventory
level more quickly. Based on our inventory turnover and profit
margin, we view this as a potentially accretive event for our
shareholders," said Michael Toups,
Chief Financial Officer of Longwei. "Our trading price has been
hovering around the Warrant strike price of $2.255 for the past week. Since the Warrants are
close to being 'in-the-money,' we believe a short-term extension,
given the unforeseen circumstances, actually reflects favorably on
our confidence in the future stock price to trade higher than the
current level."
The Company recently reported revenues of US $510.6 million and net income of US $65.1 million for the fiscal year ended
June 30, 2012. At the June 30, 2012 fiscal year-end, the Company
reported total assets of US $342.3
million and a book value per share of $3.31.
Longwei expects year-over-year revenue growth of approximately
26.6% to $646.3 million, and net
income growth of approximately 24.2% to $77.6 million, adjusted for the warrant
derivative liability, for the fiscal year ending June 30, 2013. The growth is driven primarily by
the ramp-up of the Huajie facility and organic growth at the
Company's two existing facilities.
About Longwei Petroleum Investment Holding Limited
Longwei Petroleum Investment Holding Limited is an energy
company engaged in the storage and distribution of finished
petroleum products in the People's
Republic of China. The Company's oil and gas operations
consist of transporting, storing and selling finished petroleum
products, entirely in the PRC. The Company's headquarters are
located in Taiyuan City, Shanxi
Province. The Company has a storage capacity for its
products of 220,000 metric tons located at three storage facilities
within Shanxi: Taiyuan, Gujiao and
Huajie, which have an individual storage capacity of approximately
50,000 metric tons ("mt"), 70,000mt, and 100,000mt, respectively.
The Company has the necessary licenses to operate and sell
petroleum products not only in Shanxi, but throughout the entire PRC. The
Company's storage tanks have the largest storage capacity of any
non-government operated entity in Shanxi.
The Company seeks to earn profits by selling its products at
competitive prices with timely delivery to transportation
companies, coal mining operations, power supply customers,
large-scale gas stations and small, independent gas stations. The
Company also earns revenue from agency fees by acting as a
purchasing agent for other intermediaries in Shanxi, and through limited sales of diesel
and gasoline at two retail gas stations, each located at the
Company's Taiyuan and Gujiao facilities. The Company seeks to
continue to expand its customer base and distribution platform
through the utilization of its large storage capacity, which allows
the Company the flexibility to take advantage of pricing, supply
and demand fluctuations in the marketplace.
Longwei was recently named to the Forbes list of
"Asia's 200 Best Under a Billion"
from a universe of 15,000 companies. Forbes ranked the
companies based on sales growth, earnings growth and return on
equity in the past 12 months and over three years. As was reported,
Longwei's three-year track record is 45% sales growth, 28% earnings
per share growth and 28% return on equity. The Forbes
article can be found at:
http://www.forbes.com/sites/christinasettimi/2012/07/25/asias-200-best-under-a-billion
For further information on Longwei Petroleum Investment Holding
Limited, please visit http://www.longweipetroleum.com. You may
register to receive Longwei Petroleum Investment Holding Limited's
future press releases or request to be added to the Company's
distribution list by contacting Dave
Gentry at info@redchip.com.
Forward-Looking Statements
Certain statements contained herein constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations, estimates and
projections about Longwei's industry, management's beliefs and
certain assumptions made by management. Readers are cautioned that
any such forward-looking statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Because such statements
involve risks and uncertainties, the actual results and performance
of the Company may differ materially from the results expressed or
implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. Longwei's operations are conducted
in the PRC and, accordingly, are subject to special considerations
and significant risks not typically associated with companies in
North America and Western Europe. These include risks associated
with, among others, the political, economic and legal environment
and foreign currency exchange. The Company's results may be
adversely affected by changes in the political and social
conditions in the PRC and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures,
currency conversion, remittances abroad, and rates and methods of
taxation. Other potential risks and uncertainties include but are
not limited to the ability to procure, properly price, retain and
successfully complete projects, and changes in products and
competition. Unless otherwise required by law, the Company also
disclaims any obligation to update its view of any such risks or
uncertainties or to announce publicly the result of any revisions
to the forward-looking statements made here. Readers should review
carefully reports or documents the Company files periodically with
the Securities and Exchange Commission.
Contact:
At the Company:
Michael Toups, Chief Financial
Officer
Tel: U.S. Office +1-727-641-1357
Email: mtoups@longweipetroleum.com
Web: http://www.longweipetroleum.com
Investor Relations:
Mike Bowdoin
RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 110
Email: mike@redchip.com
Web: http://www.redchip.com
SOURCE Longwei Petroleum Investment Holding Ltd.