Lone Star to buy Australia-listed Sino Gas for $402m
Sino Gas & Energy Holdings, an Australia-listed natural gas developer focused on China, has accepted a A$530 million ($402 million) buyout offer from Lone Star Funds.
According to a regulatory filing Lone Star will pay A$0.25 per share for Sino Gas in cash, a premium to the May 30 closing price of A$0.22. Following the announcement of the deal shares climbed as high as A$0.25 in morning trading, before closing at A$0.24 on May 31.
Lone Star is investing out of Lone Star Fund X, its latest global buyout fund that closed in 2016 at $5.5 billion. The Sino Gas board has already recommended that shareholders accept the offer, with Glenn Corrie, a managing director at the company, saying the cash payout "provides shareholders with cash certain value now versus the future risks and uncertainties associated with the business."
Sino Gas has been operating in China since 2005 and is currently developing two major gas fields in the Ordos Basin in Shanxi province covering more than 3,000 square kilometers. Earlier this year the company received initial approval from its partner, China National Offshore Oil Corporation (CNOOC), to begin production at the site. It expects to receive full approval by next year.
Natural gas is a key clean energy component in China's 13th Five-Year Plan, which identified the reserves in the Ordos Basin as a strategic asset.
Sino Gas recorded revenue of $3.7 million for the year ended December 2017, up from $129,000 the year before. The company's net loss for the year came to $4.5 million, down from $7.8 million the previous year.
Lone Star operates in North America, Europe, Latin America and Asia Pacific, seeking investments in financial assets including residential, corporate and consumer debt, along with financially oriented and other operating assets. In 2016, the firm made a A$421 million bid for AWE, another Australia-based oil and gas producer with operations in China, but the offer was rejected.
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