Realises Vertical Business Integration by Expanding Foothold into PPS Industry
HONG KONG, Nov. 8, 2010 /PRNewswire-Asia/ -- Lumena Resources Corp. ("Lumena" or the "Company", HKEx Stock Code: 67), the world's second largest thenardite producer*, announces today that it will acquire up to 95.00% but not less than 89.49% of equity interest in Sino Polymer New Materials Co., Ltd. ("Sino Polymer"), one of the world's largest PPS resin producers**. Total consideration for 100% of the share capital of Sino Polymer in issue on completion amounted to HK$11,634,750,000 which is the agreed equivalent of US$1,500,000,000.
The consideration will be satisfied by means of: (a) as to 90%, by way of allotment and issue of Shares at an issue price of HK$3.15 for each Share; and (b) as to the balance of the consideration, by way of cash payment within four months following completion. This issue price for the Shares represents a premium of approximately 7.51% to the closing price of HK$2.93 per Share as quoted on the Hong Kong Stock Exchange on the last trading date of 15 October 2010. The acquisition constitutes a very substantial acquisition and connected transactions. Completion of the acquisition is subject to, among others, the approval by independent shareholders, the grant of the whitewash waiver by the Securities and Futures Commission of Hong Kong and the completion of due diligences.
Sino Polymer is principally engaged in the production, development and sales of PPS resin, PPS compounds and PPS fibre. It owns and operates two plants in Chengdu City and Deyang City in Sichuan Province respectively. These plants involve production of the injection moulding-grade, coating-grade and fibre-grade PPS resin, PPS fibre and PPS compounds. Sino Polymer is one of the largest PPS resin producers in terms of production capacity in the world as of 31 December 2009.
As of 30 June 2010, Sino Polymer has a PPS resin production capacity of 30,000 metric tonnes per annum, PPS compounds production capacity of 30,000 metric tonnes per annum and PPS fibre production capacity of 5,000 metric tones per annum. It uses its own PPS resin to produce PPS compounds and fibre. Different from its competitors, Sino Polymer is one of the most vertically integrated PPS products producers in the world.
* In terms of production capacity as of December 31, 2008, according to Behre Dolbear, an independent market research consultant
** In terms of production capacity as of December 31, 2009
PPS is a crystalline and wholly aromatic polymer characterised by outstanding chemical resistance, thermal and dimensional stability, flame retardance and electrical properties. PPS is often the material of choice in various industries where there is a hot and corrosive environment and is also often selected to replace metals. It is widely used in electrical applications, electronic applications, automotive applications, transportation applications, environmental protection and emissions reduction applications, aeronautics and astronautics applications, and coatings applications, etc. One of the two principal feedstocks necessary to produce PPS is sodium sulfide. Through a de-oxidation process, sodium sulfide can be produced directly from sodium sulfate, which is a purified form of thenardite and is currently produced by Lumena.
The unaudited net asset value of Sino Polymer as of 30 June 2010 is RMB2.297 billion. The profit from operation during the 12 months ended 31 December 2009 and the 6 months ended 30 June 2010 were RMB761.25 million and RMB623.26 million, respectively.
The consideration is approximately 11.2 times the annualised unaudited net profit of Sino Polymer for the six months ended 30 June 2010 excluding changes in fair value of financial instruments. The consideration was determined after arm's length negotiations among the Company and Vendors, which took into account recent valuations of listed companies operating in the similar industries, the business prospects, financial position and performance of Sino Polymer, the future synergies to be derived after the successful integration, the reasons and benefits to be derived from the acquisition, and also the agreed valuation of Sino Polymer.
Commenting on the acquisition, Mr. Zhang Daming, Executive Director and CEO of Lumena, said, "One of our business strategies is to achieve vertical business integration by exploring downstream business expansion opportunities. We believe the vertical integration of Lumena and Sino Polymer, each being one of the leading players in their respective industry sectors, is in line with our strategy and would allow Lumena to achieve additional growth and maximize shareholders' return".
Mr. Zhang continued "With increased focus on high-end high performance specialty downstream products, we believe that the acquisition will enable the Company to make a meaningful step in our stated strategic direction to focus on downstream thenardite products. It will also enable the Company to become one of the world-leading producers of high-end specialty materials, with a balanced product offering of approximately 49% thenardite and 51% PPS, based on the revenues of the respective product groups in the first half of 2010. It is our long-term strategy to focus on high performance applications. On the other hand, Lumena will broaden its source of income from capturing a larger part of the business chain through this acquisition. The vertical integration will also strengthen our ability to produce higher quality products and reduce cost through operational synergies. The resulted diversification of Lumena's business portfolio will also enhance our resilience to fluctuations in business environment."
Following the completion, Lumena plans to set up a strategic alliance with a processing agent to convert sodium sulfate produced by Lumena into sodium sulfide, which can be then used by Sino Polymer to produce PPS. This will enable the Company to internally source all sodium sulfide required for PPS production and ensure optimal product quality and operational efficiency. Lumena believes that the production of high-end thenardite products with higher premium will further increase the value of Lumena.
Sino Polymer has developed more than 100 PPS related products, is the registered owner of 5 patents and has applied for 16 invention patents which are PPS related production technologies. It has also collaborated with large domestic end users and industry associations to develop new and enhance existing PPS products.
"With Sino Polymer's economies of scale, leading market position, advanced technology as well as focused and integrated operations, we are confident that Sino Polymer is well-positioned in light of future competition and be able to capitalise on the long-term growth in the PPS industry in the PRC. With its close proximity to our customer base and key raw materials suppliers, together with its large-scale production capacity, Sino Polymer guarantees a timely product delivery and reduces transportation expenses. Through the acquisition, Lumena will transform into a vertically-integrated producer of specialised chemicals and a high-technology corporation producing specialised new materials. We strive to become the world-leading corporation in chemical industry. Led by an experienced management team, we are confident that Lumena will continue to pursue remarkable results and bring fruitful returns to our investors." Mr. Zhang concluded.
About Lumena Resources Corp.
Lumena focuses its operations on the mining, processing and manufacturing of natural thenardite products, and is the second largest thenardite producer in the world in terms of production capacity as of 31 December 2008*. Equipped with the world's largest single line production facility, the Company produces high quality thenardite products, including powder thenardite, specialty thenardite and medical thenardite. Lumena operates four captive underground glauberite mines in Dahongshan Mining Area, Guangji Mining Area, Muma Mining Area and Yuegou Mining Area in Sichuan Province. In 2009, its reserves are higher than the average grade in China, according to JT Boyd**.
* Behre Dolbear & Company (USA) Inc., an independent market research consultant** John T. Boyd Company, a mining consultant firm
Issued by Porda International (Finance) PR Company Limited for and on behalf of Lumena Resources Corp. For further information, please contact:
Porda International (Finance) PR Company Limited
Ms. Helen Chung
+852 3150 6730
helen.chung@pordafinance.com.hk
Ms. Sharis Siu
+852 3150 6771
sharis.siu@pordafinance.com.hk
Ms. Kelly Fung
+852 3150 6763
kelly.fung@pordafinance.com.hk
Ms. Fiona Ko
+852 3150 6750
fiona.ko@pordafinance.com.hk
Ms. Sumie Chan
+852 3150 6752
sumie.chan@pordafinance.com.hk
