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Puda Coal Received Government Approval to Complete Corporate Restructuring
Nov 16, 2007 (08:11 AM EST)
TAIYUAN, China, Nov. 16 /Xinhua-PRNewswire-FirstCall/ -- Puda Coal, Inc. ("Puda Coal" or the "Company"), a supplier of China's high grade metallurgical coking coal used to make coke for the purposes of steel manufacturing, announced that on November 8, 2007, the Company received an approval from the Chinese government to complete the acquisition of Shanxi Puda Coal Group Co., Ltd. ("Shanxi Coal").
Based on the recommendation of the Company's audit committee, comprised solely of independent directors, on September 13, 2007, Shanxi Putai Resources Limited ("Putai"), a wholly owned indirect subsidiary of the Company, exercised an option to acquire 90% of the registered capital of Shanxi Coal, an entity controlled by Putai through an Exclusive Consulting Agreement, Operating Agreement, Technology License Agreement and Authorization (collectively, the "Operating Agreements"), each entered into on June 24, 2005, among Putai, Shanxi Coal, and the two shareholders of Shanxi Coal, Zhao Ming and Zhao Yao, at an acquisition price of RMB20,250,000, or US$2.7 million, pursuant to an Exclusive Option Agreement dated June 24, 2005 among Putai, Shanxi Coal and the two shareholders of Shanxi Coal, Zhao Ming and Zhao Yao. The acquisition was completed on November 8, 2007 upon the receipt of the government approval and following the acquisition, Putai became a 90% direct owner of Shanxi Coal and Shanxi Coal remained a fully consolidated subsidiary of the Company. Putai is required to pay the purchase price by December 12, 2007.
"We are pleased that we received the government approval to complete the acquisition of Shanxi Coal," stated Zhao Ming, Puda Coal's Chairman and Chief Executive Officer. "We view this as an important step in streamlining our corporate structure and protecting the interests of our shareholders."
Prior to the acquisition, the Company did not have direct equity ownership in Shanxi Coal. However, Shanxi Coal was included in the consolidated financial statements of the Company because, through a series of operating, consulting and licensing agreements among Putai, Shanxi Coal and Shanxi Coal's owners, Zhao Ming and Zhao Yao, the Company managed and controlled the operations of Shanxi Coal, received all of the economic benefits of Shanxi Coal and bore all of the risks of Shanxi Coal's operations.
Upon the completion of the acquisition, Putai terminated the Operating Agreements.
About Puda Coal, Inc.
Puda Coal, through its affiliates and subsidiaries, supplies premium grade coking coal to the steel making industry for use in making coke. The Company currently possesses 3.5 million metric tons of annual coking coal cleaning capacity. Shanxi Province provides 20 - 25% of China's coal output and supplies nearly 50% of China's coke.
The information contained herein includes forward-looking statements. These statements relate to future events or to our future anticipated financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. For example, our expectation that the purchase price for the acquisition of Shanxi Coal will be paid by December 12, 2007 is subject to the risk that Putai may not pay the purchase price by such time and Putai may then be subject to the claims for breach of contract and related damages by Shanxi Coal's original owners. We do not intend to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.
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