TAIYUAN, Shanxi, China, Sept. 20 /Xinhua-PRNewswire-FirstCall/ -- Puda Coal, Inc. (OTC Bulletin Board: PUDC) ("Puda Coal" or the "Company"), a leading supplier of China’s high grade metallurgical coking coal used to make coke for the purposes of steel manufacturing, today announced that the Company has made certain adjustments to its corporate structure based on the recommendation of the Company’s newly established Audit Committee comprised solely of independent directors.
Pursuant to the board resolution dated September 6, 2007, Shanxi Putai Resources Limited ("Putai"), a wholly owned subsidiary of the Company, exercised an option to acquire 90% of the registered capital of Shanxi Puda Coal Group Co., Ltd. ("Shanxi Coal") on September 13, 2007 at an acquisition price of RMB20,250,000, or US$2.7 million, pursuant to an Exclusive Option Agreement dated June 24, 2005 among Putai, Shanxi Coal and the two shareholders of Shanxi Coal, Zhao Ming and Zhao Yao. Previously, the Company did not have direct equity ownership in Shanxi Coal. However, Shanxi Coal was included in the consolidated financial statements of the Company because, through a series of operating, consulting and licensing agreements among Putai, Shanxi Coal and Shanxi Coal’s owners, Zhao Ming and Zhao Yao. The Company managed and controlled the operations of Shanxi Coal, received economic benefits from Shanxi Coal and incurred risks derived from Shanxi Coal’s operations. Putai will pay the purchase price within three months. After the acquisition, Putai will become a 90% owner of Shanxi Coal and Shanxi Coal and will remain a fully consolidated subsidiary of the Company. The closing of the acquisition depends on the date the Chinese government approves or confirms the acquisition.
By exercising the option, Putai agreed to terminate the Option Agreement as well as the Exclusive Consulting Agreement, Operating Agreement, Technology License Agreement and Authorization (collectively, the "Agreements"), each entered into on June 24, 2005, among Putai, Shanxi Coal, and the two shareholders of Shanxi Coal, Zhao Ming and Zhao Yao, upon the receipt of government approval or confirmation with respect to Putai’s acquisition of 90% of the total registered capital of Shanxi Coal.
The Board of Directors and the Audit Committee believe that the exercise of the option and termination of the operating agreements clarify the corporate structure of the Company and its consolidated equity, strengthen the Company’s control over Shanxi Coal without relying on the validity and enforceability of contracts and better protect shareholders rights and interests.
"We are pleased that our newly formed audit committee has recommended these important corporate restructuring measures and we view this as an important step in improving our corporate structure to make it more transparent to investors," stated Zhao Ming, Puda Coal’s Chairman and Chief Executive Officer. "We also continue to pursue additional qualified directors to join our Board, as we seek to further enhance our corporate governance."
On August 28, 2007, the Board of Directors established an Audit Committee comprised of two independent directors, Mr. Lawrence S. Wizel and Mr. Jianfei Ni. Mr. Wizel was appointed the Chairman of the Audit Committee and will serve as an audit committee financial expert.
About Puda Coal, Inc.
Puda Coal, through its affiliates and controlled entities, supplies premium grade coking coal to the steel making industry for use in making coke. The Company currently possesses 3.5 million metric tons of annual coking coal cleaning capacity, and management believes it is the largest coking coal cleaning company in terms of capacity in Shanxi Province, China. Shanxi Province provides 20 - 25% of China’s coal output and supplies nearly 50% of China’s coke.
FORWARD-LOOKING STATEMENTS
The information contained herein includes forward-looking statements. These statements relate to future events or to our future anticipated financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We do not intend to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.
For more information, please contact:
Company Contact:
Wenwei Tian
Director of Investor Relation
Puda Coal, Inc.
Tel: +86-351-228-1302
Email: awtian@yahoo.com
Investor Relations Contact:
Crocker Coulson
President
CCG Elite
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
