BEIJING and SALT LAKE CITY, April
2, 2014 /PRNewswire-FirstCall/ -- Sino Gas International
Holdings Inc. (OTC: SGAS, "Sino Gas" or the "Company"), a holding
company that is engaged in the development of natural gas
distribution systems and the distribution, of natural gas to
residential and industrial customers in small- and medium-sized
cities in the People's Republic of
China, today announced that it has entered into an Agreement
and Plan of Merger (the "Merger Agreement") with Prosperity Gas
Holdings Limited, a Cayman Islands
exempted company ("Parent") and Merger Sub Gas Holdings Inc., a
Utah corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), pursuant to which Parent
will acquire the Company for US$1.30
per share of the Company's common stock without interest (the
"Merger Consideration"). The Merger Consideration represents
a 160% premium over the previously announced offer price of
$0.5, a 165% premium over the closing
price of $0.49 per share of Company
common stock as quoted by OTC Bulletin Board on December 6 2013, and a 166% premium to the
volume-weighted average price of the Company's common stock during
the 30 trading days prior to December 6,
2013, the last trading day prior to the Company's
announcement on December 8, 2013 that
it had received a "going private" proposal from Mr. Yuchuan Liu, the Company's Chairman and Chief
Executive Officer, and an affiliate of Morgan Stanley Private
Equity Asia. The Merger Consideration implies an equity value
of the Company of approximately US$74.9
million, on a fully diluted basis.
Parent intends to finance the Merger through a combination of
(i) an equity commitment of approximately US$28.96 million by MSPEA Gas Holdings Limited,
an affiliate of Morgan Stanley Private Equity Asia, (ii) an equity
commitment of US$37.45 million by
Zhongyu Gas Holdings Limited, a company listed on the Hong Kong
Stock Exchange and a leading gas service operator in China, and (iii) rollover equity contributed
by Mr. Liu through his investment vehicle.
Pursuant to the terms and subject to the conditions of the
Merger Agreement, Merger Sub will merge with and into the Company
with the Company surviving the merger and becoming a wholly-owned
subsidiary of Parent (the "Merger"). In connection with and at the
effective time of the Merger, each share of the Company's common
stock that is outstanding immediately prior to the effective time
of the Merger will be cancelled in consideration for the right to
receive $1.30 in cash without
interest (the "Merger Consideration"), except for (a) shares to be
rolled over by Mr. Liu in connection with the Merger, which will be
cancelled for no consideration at the effective time of the Merger,
and (b) shares of the Company's common stock owned by shareholders
who have exercised and not effectively withdrawn or lost the right
of dissent in accordance with applicable Utah law, which shares will be cancelled at
the effective time of the Merger and will entitle the former
holders thereof to receive the appraised value thereon in
accordance with applicable Utah
law.
Following the effective time of the Merger, Parent will be
beneficially owned by Mr. Liu, an affiliate or affiliates of Morgan
Stanley Private Equity Asia and Zhongyu Gas Holdings Limited.
Currently, Mr. Liu beneficially owns an aggregate of approximately
11.3% of the outstanding shares of the Company's common stock.
The Company's board of directors, acting upon the unanimous
recommendation of a special committee comprised solely of directors
of the Company who are independent and unaffiliated with any of
Parent, Merger Sub, Mr. Liu, Morgan Stanley Private Equity Asia or
its affiliates, Zhongyu Gas Holdings Limited or any of the
management members of the Company (the "Special Committee"),
approved the Merger Agreement and the Merger and resolved to
recommend that the Company's shareholders vote to approve the
Merger Agreement and the Merger. The Special Committee exclusively
negotiated the terms of the Merger Agreement with the assistance of
its financial and legal advisors.
The Merger, which is currently expected to close in the second
quarter of 2014, is subject to the approval of the Merger Agreement
and the Merger at the Company's shareholders' meeting by both
holders of at least a majority of the issued and outstanding shares
of the Company's common stock, as well as other customary
conditions.
Concurrently with the execution of the Merger Agreement, Mr.
Liu's investment vehicle has entered into a voting agreement with
Parent whereby Mr. Liu's investment vehicle will, among other
things, to vote all of the shares of the Company's common stock
beneficially owned by him in favor of the approval of the Merger
Agreement and the Merger, representing approximately 11.3% of the
outstanding shares of the Company's common stock. If completed, the
Merger will result in the Company becoming a privately-held company
and its common stock will no longer be publicly traded.
Ohrenstein & Brown, LLC is serving as United States legal advisor to the Special
Committee and Houlihan Lokey
(China) Limited is serving as
financial advisor to the Special Committee. Cadwalader,
Wickersham & Taft LLP is serving as United States legal advisor to the
Company.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as
United States legal advisor to the
buyer consortium. Cleary, Gottlieb, Steen & Hamilton LLP
is serving as United States and
Hong Kong legal advisor to Zhongyu
Gas Holdings Limited. Winston & Strawn LLP is serving as
United States legal advisor to Mr.
Yuchuan Liu.
Additional Information about the Merger
The Company will furnish to the Securities and Exchange
Commission (the "SEC") a report on Form 8-K regarding the Merger,
which will include the Merger Agreement. All parties desiring
details regarding the Merger are urged to review these documents,
which will be available at the SEC's website
(http://www.sec.gov).
In connection with the Merger, the Company will prepare and mail
a proxy statement to its shareholders. In addition, certain
participants in the Merger will prepare and mail to the Company's
shareholders a Schedule 13E-3 transaction statement. These
documents will be filed with or furnished to the SEC. INVESTORS AND
SHAREHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY
THESE MATERIALS AND OTHER MATERIALS FILED WITH OR FURNISHED TO THE
SEC WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE COMPANY, THE MERGER AND RELATED MATTERS. In
addition to receiving the proxy statement and Schedule 13E-3
transaction statement by mail, shareholders also will be able to
obtain these documents, as well as other filings containing
information about the Company, the Merger and related matters,
without charge, from the SEC's website (http://www.sec.gov) or at
the SEC's public reference room at 100 F Street, NE, Room 1580,
Washington, D.C. 20549.
The Company and certain of its directors, executive officers and
other members of management and employees may, under SEC rules, be
deemed to be "participants" in the solicitation of proxies from our
shareholders with respect to the Merger. Information regarding the
persons who may be considered "participants" in the solicitation of
proxies will be set forth in the proxy statement and Schedule 13E-3
transaction statement relating to the Merger when it is filed with
the SEC. Additional information regarding the interests of such
potential participants will be included in the proxy statement and
Schedule 13E-3 transaction statement and the other relevant
documents filed with the SEC when they become available.
This announcement is neither a solicitation of proxy, an offer
to purchase nor a solicitation of an offer to sell any securities
and it is not a substitute for any proxy statement or other filings
that may be made with the SEC should the Merger proceed.
About Sino Gas International Holdings Inc.
The Company, is a leading developer of natural gas distribution
systems in small and medium size cities in China, as well as a distributor of natural gas
to residential, commercial and industrial customers in China. The Company owns and operates natural
gas distribution systems in Beijing, Hebei, Jilin,
Jiangsu, and Yunnan Provinces. The
Company's website is: http://www.sino-gas.com
Cautionary Note Regarding Forward-Looking Statements
This document may include certain statements that are not
descriptions of historical facts, but are forward-looking
statements. Such statements include, among others, those concerning
expected benefits and costs of the proposed Merger; management
plans relating to the Merger; the expected timing of the completion
of the Merger; the parties' ability to complete the Merger
considering the various closing conditions, including any
conditions related to regulatory approvals, as well as all
assumptions, expectations, predictions, intentions or beliefs about
future events. Forward-looking statements can generally be
identified by the use of forward-looking terminology such as
"will," "should," "may," "believes," "expects" or similar
expressions. Such information is based upon expectations of the
Company's management that were reasonable when made but may prove
to be incorrect. All of such assumptions are inherently subject to
uncertainties and contingencies beyond the Company's control and
based upon premises with respect to future business decisions,
which are subject to change. Risks and uncertainties that may cause
actual results to differ from the forward-looking statements
contained in this press release include, but are not limited to,
those discussed under the heading "Risk Factors" in the Company's
annual report on Form 10-K for the fiscal year ended December 31, 2012, as amended, and in other
reports filed with the United States Securities and Exchange
Commission and available at www.sec.gov. The Company assumes no
obligation to update any such forward-looking statements.
SOURCE Sino Gas International Holdings, Inc.