omniture

Zhongyu Gas Holdings Limited: Participation of Leading Institutional Investors Paves the Way for Successful Development of Coalbed Methane ("CBM") Resources

Zhongyu Gas Holdings Limited
2007-06-06 18:33 9007

HONG KONG, June 7 /Xinhua-PRNewswire/ -- Zhongyu Gas Holdings Limited ("Zhongyu Gas" or the "Group") (Stock Code: 8070), an early mover in developing a vertically integrated gas operation from upstream resources development to downstream distribution in China, is pleased to announce the successful conclusion of its latest round of financing to develop coalbed methane ("CBM") resources in China.

Coalbed methane is a form of natural gas found on top of coal deposits. It is completely interchangeable with conventional natural gas and can be readily mixed with the latter. The Chinese government has recently promulgated favorable policies promoting the development of CBM to address the growing natural gas shortage in the country. At the same time, the extraction of CBM removes a highly flammable gas from coal mines, thus improving miner safety levels. CBM has a long history of development and has been part of natural gas supply in the United States for decades, currently accounting for approximately 8% of the total natural gas production in the United States.

In order to develop its approximately 1 trillion cubic meters (34 trillion cubic feet) of CBM reserves in Henan, the Group announced on 29 May 2007 the placing of 279,000,000 shares at a price of HK$1.165 per share and the proposed issue of US$40 million 1% Convertible Bonds due 2012. The net proceeds will total approximately HK$609,520,000 (equivalent to approximately US$78 million). Part of the proceeds will also be used to acquire three downstream gas distribution assets.

In particular, the Group would like to highlight the participation of a number of large institutional investors with extensive investment experience in the global energy space. Perry Capital is one such institutional investor who has invested in more than 5% of Zhongyu Gas. Perry Capital has made investments globally in the energy sector, including companies with CBM operations.

Richard Hao, CEO of Zhongyu Gas said, "CBM is still at an infant stage in China, and we are very happy to have the support of leading institutional investors. China is one of the largest energy consuming countries in the world, and there is a growing demand for cleaner forms of energy such as natural gas. Coalbed methane can be used interchangeably with natural gas, of which is there is a significant shortage in the region where Zhongyu Gas operates."

Mr. Wang Wenliang, Chairman of Zhongyu Gas, concluded, "We are very fortunate to have Perry Capital as one of our largest institutional shareholders. The support of our new institutional investors in this round of financing will enable us to take full advantage of our exclusive right to develop CBM resources in Henan, a province with proven CBM reserves of 1 trillion cubic meters (34 trillion cubic feet). We will continue to leverage our various resources and remain dedicated to maximizing shareholder return."

About Zhongyu Gas Holdings Limited

Zhongyu Gas Holdings Limited ("Zhongyu Gas") (Stock Code: 8070), is an early mover in developing a vertically integrated gas operation from upstream resource development to downstream distribution in China. This is a unique model in the China gas sector. Zhongyu Gas enjoys the exclusive right to develop CBM resources in Henan, a province with proven CBM reserves of approximately 1 trillion cubic meters (34 trillion cubic feet). It has also formed strategic alliances with strong technical partners who have successful track records in extracting CBM resources in a commercially viable and economically attractive manner. Currently Zhongyu Gas has six downstream projects under operation (Sanmenxia, Yongcheng, Linyi Zhongyu, Linyi China Gas, Xinmi, Yanshi). Another three projects (Jiaozuo, Luohe, Jiyuan) will be injected into Zhongyu Gas under a previously announced very substantial acquisition. Zhongyu Gas was listed on the GEM board of the Stock Exchange of Hong Kong in 2001.

About Perry Capital

Founded in 1988, Perry Capital LLC is an investment firm with approximately $14 billion under management with affiliated offices in New York, Hong Kong and London. The Perry Capital approach is that of a fundamental research-driven bottom-up value investor, and the portfolio consists primarily of equities, fixed income securities and private investments. The firm's portfolio managers consider their investments to be a partnership with management, striving to develop close working relationships with the critical members of a company's operating team.

For further information, please contact:

Zhongyu Gas Holdings Limited.

Mr. Daniel Lui/ Ms. Lucy Sun

Tel: +852-2295-1550/+852-2295-1555

Fax: +852-2295-1228

Email: daniellui@zhongyugas.com/ lucysun@zhongyugas.com

CCG Elite Investor Relations Limited

Ms. Michelle Fang

Tel: +852-3183-0229

Fax: +852-2155-9165

Email: michelle.fang@ccgelite.com

Source: Zhongyu Gas Holdings Limited
Keywords: Oil/Energy
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