XI'AN, China, July 24 /PRNewswire-Asia/ -- China Bio Energy Holdings Group (Nasdaq: CBEH), a leading manufacturer and distributor of
bio-diesel and distributor of petroleum-related products including gasoline, diesel, and heavy oil in China, today announced that it has reached an agreement to acquire, through a thirty-year lease, all of the assets of a gas station located in the city of Xi'an, Shaanxi Province, PRC.
The gas station was acquired for a total consideration of $2.6 million and will be operated under a 30-year lease. The gas station distributes both gasoline and diesel, which includes blended bio-diesel. During the past twelve months, the gas station sold approximately 2 thousand tons of fuel and generated revenues of $1.9 million. For the next twelve months, the Company estimates it will sell approximately 3.5 thousand tons and generate approximately $3 million in revenues.
Operating as both a producer and distributor, China Bio Energy has the ability to provide stable supply for each of its five gas stations. Customers pay cash with an average inventory turn of 3 days. As of March 31, 2009, average gross margins for its service stations were 13% with net margins of 11%, which is higher than traditional distribution. The payback period for leasing a station is estimated to be less than 18 months.
"We are pleased to complete this acquisition, which marks our sixth gas station in the Shaanxi province," stated Mr. Gao Xincheng, Chief Executive Officer of China Bio Energy Holdings Group. "This acquisition is part of our strategy to lease an additional four to five gas stations by the end of 2009, which will provide incremental revenues and profitability. In addition, we believe the recent increase in fuel prices by the Chinese government will also favorably impact overall profits as oil prices continue to recover in tandem with economic activity. Our vertically integrated model provides a strong platform for significant future growth as we capitalize on the long-term secular growth of fuel consumption in the PRC." Mr. Gao concluded, "With over $35 million in cash and equivalents complementing strong cash flow, we are well positioned to further increase our bio-diesel production capabilities while expanding both our wholesale and retail distribution business throughout China."
About China Bio Energy Holdings Group
CBEH is a distributor of refined oil products including gasoline, diesel, and heavy oil, and a manufacturer and distributor of bio-diesel fuel. CBEH's bio-diesel fuel is made at its 100,000-ton capacity facility in Shaanxi Province. Feedstock consists of naturally growing non-edible seeds and waste oil from restaurants. CBEH's bio-diesel can be used as a complete substitute for petro-diesel or can be blended with petro-diesel. The Company's products are sold via its own distribution network, which includes five fuel depots in Shaanxi Province that have both road and rail access.
Safe Harbor Statement
This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
