Last checked at 30 Apr 2013 07:00
30 April 2013
GREEN DRAGON GAS LTD
("Green Dragon" or the "Company")
Proposed demerger of Greka Engineering & Technology Ltd.
The Board of Green Dragon Gas Ltd. (AIM:GDG), one of the largest independent companies involved in the production of CBM gas and the distribution and sale of wholesale gas in China, is pleased to announce that is intending to demerge its engineering business by means of a dividend in specie of shares in Greka Engineering & Technology Ltd ("Greka Engineering") to Green Dragon Shareholders (the "Demerger"). The Demerger, which is conditional upon the approval of Green Dragon Shareholders in general meeting, is expected to take place during June 2013 and it is intended that application will be made for shares in Greka Engineering to be admitted to trading on AIM.
Greka Engineering is a newly-incorporated subsidiary of Green Dragon and was established to hold Green Dragon's engineering and technology businesses and certain of its pipeline and gas compression assets (together the "Greka Engineering Group" or the "Group").
The Greka Engineering Group's business includes the provision of engineering, procurement, construction and management services for infrastructure projects in the unconventional gas sector in China. Projects completed include the design, construction and management of gas gathering systems, a CNG compressing integrated production facility, the installation and commissioning of a 10MW gas-fired power facility and the successful build, maintenance and operation of eight CNG retail stations in 2012. All of these projects were completed for Green Dragon. Greka Engineering has also completed a gas pipeline connecting a Green Dragon gas producing block in Shanxi Province to the China West-East pipeline, the installation and maintenance of additional gas gathering equipment and a pipeline which connects producing wells to the Company's integrated production facility.
The Group is also involved in the research, development and delivery of technologies specific to the unconventional gas sector and incorporating such technologies into industry-specific hardware manufactured in-house such as well-head and gas gathering system compressors, CNG and LNG dispensers, Integrated Circuit Card Point of Sale gas station systems and a SCADA (supervisory control and data acquisition) system used for remote supervision and management of drilling operations, gas gathering systems, power facilities, vehicles, and retail gas stations.
The Group has approximately 125 employees including design engineers, pipeline engineers, electrical and mechanical engineers, project managers, facility managers and operations/field support staff.
In the year ending 31 December 2012 the Group generated revenues of US$5.9 million, EBITDA of US$16,000 and a net loss of US$1.4 million. As at 31 December 2012 the Group had total assets of approximately US$43 million (see note below).
The Board believes that the demerger of Greka Engineering from Green Dragon will enhance shareholder value in both companies. The Greka Engineering Group already operates on a stand-alone basis and trades on an arm's length basis with other businesses within the Green Dragon group. Greka Engineering's management team will focus on a separate strategy and business development plan from Green Dragon with enhanced growth prospects as an independent company servicing both Green Dragon and third party customers. In addition to Green Dragon, the Group has already provided its services to a number of different clients including PetroChina, Sinopec, CNPC and their various subsidiaries and affiliates.
It is expected that a circular containing notice of a Green Dragon EGM and further information relating to the Demerger and Greka Engineering will be sent to Green Dragon shareholders shortly.
Randeep S. Grewal, CEO and Founder of Green Dragon, commented:
"Following the successful demerger of Greka Drilling (AIM:GDL) in 2011, it has become increasingly clear that a similar opportunity exists for Green Dragon to demerge Greka Engineering which will allow that business to take full advantage of the exciting opportunities offered by the rapidly growing unconventional gas market globally in addition to its strong foothold in China. Quite similar to GDL, Greka Engineering was a necessity to efficiently develop our CBM resources and the many purpose built technologies and solutions are equally needed by the many unconventional resource developers within Asia. Green Dragon will continue to benefit from the application of such solutions but doesn't benefit any further from such ownership. On the other hand, this dividend provides our existing shareholders an opportunity to continue to grow with this niche business or reward themselves, at their own discretion."
For further information on the Company and its activities, please refer to the website at www.greendragongas.com or contact:
Stephen Hill, VP Corporate Communications Green Dragon Gas
| +852 3710 0108 |
Dr Azhic Basirov / David Jones Smith & Williamson - Nomad & Broker
| +44 20 7131 4000 |
Steve Baldwin / Nicholas Harland Macquarie Capital (Europe) Limited - Broker
| +44 20 3037 2000 |
Richard Crichton / Andy Crossley Peel Hunt - Broker
| +44 20 7418 8900 |
James Henderson / Philip Dennis Pelham Bell Pottinger - Investor Relations
| +44 20 7861 3232 |
Note on financial information
The businesses and assets which comprise the Group did not form a legal group in the period presented in the combined summary unaudited financial information above. However, these entities and assets have been under common ownership throughout this period. Consequently, the combined summary unaudited financial information has been prepared for the year ended 31 December 2012 by aggregating the assets and results of the relevant businesses and assets, after eliminating intercompany transactions and balances, and is prepared on the basis of International Financial Reporting Standards as adopted by the European Union.