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China Water Industry Announces Acquisition of Eight Sewage Treatment and Water Supply Projects
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Wednesday, August 20, 2008
Business Scope Extended to Northern and Western PRC
Further Strengthen Profitability
HONG KONG, Aug. 20 /Xinhua-PRNewswire/ -- China Water Industry Group Limited (“China Water Industry” or the “Group”) (stock code: 1129) today announced that its wholly-owned subsidiary has entered into an agreement with an independent party (the “Vendor”) about the acquisition of 100% issued share capital in Affluent Boom Enterprises Limited(“Affluent”).
Affluent is an investment holdings company, and its subsidiaries are involved in sewage treatment and water supply businesses in China. The water service group held by Affluent is currently operating seven sewage treatment plants in Huizhou City, Sihui City, Huidong County, Boluo County of Guangdong Province and Baoji City of Shaanxi Province, and one water supply plant in Tangshan City of Hebei Province, which is partially under construction and will commerce operation by next year. The aggregate sewage water treatment capacity reached 480,000 tons per day, and the aggregate water supply capacity reaches 180,000 tons per day. The profits before taxation of Affluent for the year 2007 and first half year of 2008 are HK$41,000,000 and HK$29,730,000 respectively.
The total consideration of the acquisition of Affluent is HK$700,000,000, among which i) as to RMB30,000,000 having been paid in two phases within 21 days from the date of the Agreement as deposit; ii) by issue of the Convertible Bond which to be matured in 2012, up to a maximum amount of HK$585,000,000 to the Vendor on Completion; and iii) the remaining balance by way of allotment and issue of the Consideration Shares at the Issue Price.
The Vendor has unconditionally warranted and guaranteed a consolidated net profit after tax the Group would obtain from the acquisition during the first year, the second year and the third year after the acquisition shall not be less than RMB40,000,000, RMB80,000,000 and RMB120,000,000 respectively, and it shall deposit with an escrow agent the Certificates representing HK$120,000,000 as a guarantee.
Huizhou, Huidong, Boluo and Sihui in Guangdong are located at the North-Eastern and North-Western end of the Pearl River Delta. With rapid growth in populations as well as economies, local governments in the area regarded sewage treatment projects and actively nourished corporations in the water industry. Sewage treatment fee at the area was RMB0.86 per ton to RMB1.10 per ton with sewage treatment scale growing on a stable track. At the same time, Baoji City and Tangshan City, being the industry hubs in the western and northern PRC, is where locally and internationally renowned large scale state-owned enterprise and large number of private and foreign-invested companies located. Industrial water usage and sewage treatment demand grew by high speed of 35% to 50% per annum and industrial-use water price is on a rising trend. Benefited from such a favourable environment and various policies, the eight sewage treatment and water supply projects have a huge development potential and very good profitability.
Mr. Li Yu Gui, Chairman of China Water Industry, said, “Apart from the number of water service corporations, the water service group controlled by Affluent is equipped with strong team of experienced environmental protection professionals, National Grade A standard pollution treatment facilities, as well as ISO9001 environmental project design and sewage treatment operations quality control certification. This acquisition is a very important milestone for China Water Industry as this raised the Group’s water supply and sewage treatment capacity to 2,480,000 tons per day and 580,000 tons per day respectively. If the above is added to the water supply capacity of 3,050,000 tons per day and sewage treatment capacity of 835,000 tons per day of projects with letter of intent signed in Shenyang City, Yunfu City, and Geermu City, the total water supply capacity and sewage treatment capacity of the Group will reach 5,500,000 tons per day and 1,415,000 tons per day respectively. The group is getting closer and closer to its goal of attaining water supply capacity of 10,000,000 tons per day and sewage treatment capacity of 2,000,000 tons per day. Furthermore, the Group has successfully expanded its water business network to western and northern PRC, and gradually became a nation-wide influential water service group. We will actively pursuit and acquire more quality water service projects to strengthen the Group’s profitability and bring better return to shareholders.”
About China Water Industry Group Limited (stock code: 1129)
China Water Industry Group Limited is set to become a leader in China’s water investment and operation and management industry. The Group has been actively tapping the water industry in China during these years. Recently, the Group has progressively acquired all or part of the interests in the water supply and/or sewage treatment projects in Yichun City and Yingtan City of Jiangxi Province, Dangshan County of Anhui Province, Jinan City of Shandong Province, Jinxiang County in Jining city of Shandong Province, Linyi City of Shandong Province, Shangqiu City of Henan Province and Danzhou City of Hainan Province. With a wealth of professional management team comprising experts of city construction and water infrastructure investment, operation and management, the Group has also forged close cooperative relationship with many leading water facilities construction and design enterprises in China.
For press enquiries:
Strategic Financial Relations (China) Limited
Mr. Marcus Keung
Tel: +852-2114-4967
Email: marcus.yeung@sprg.com.hk
Ms. Arlene Wong
Tel: +852-2864-4899
Email: arlene.wong@sprg.com.hk
Ms. Amanda Xu
Tel: +852-2864-4860
Email: amanda.xu@sprg.com.hk
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