(Adds details, updates share movement)
Dec 17 Fortune Oil Plc said it would
sell its natural gas business to China Gas Holdings Ltd
for $400 million, giving it the option to raise its
stake in China Gas and remain invested in the high-demand energy
sector in the world's second largest economy.
Fortune Oil held an 18.4 percent stake in China Gas as of
Nov. 16, primarily through a joint venture formed last year with
one of the company's founders.
China Gas, which sells liquefied petroleum gas and piped gas
to residential and commercial users in China, will pay Fortune
Oil $200 million in cash on completion of the deal and a further
$200 million as deferred consideration.
Fortune Oil said it could elect to receive the deferred
consideration in China Gas shares. A higher stake in China Gas
could also potentially give it a say in the management of the
China is moving to double the share of gas in its overall
energy supply to more than 8 percent by 2015, when consumption
is forecast to reach 260 billion cubic metres (bcm).
"The company intends to be a long-term shareholder in China
Gas so as to benefit from the potential growth in this sector in
China over the medium term," Fortune Oil said.
The deal is part of an asset restructuring at China Gas,
sources with knowledge of the deal said on Monday. They declined
to be identified as they were not authorised to speak to the
Net proceeds from the deal would be used to reduce debt,
Fortune Oil said in a statement.
Revenue from Fortune Oil's natural gas business was 59
million pounds (about $95 million) for the year ended Dec. 31,
Shares in Fortune Oil were trading up 26 percent at 11.35
pence at 0955 GMT on the London Stock Exchange. Trading in China
Gas shares were suspended in Hong Kong on Monday.
($1 = 0.6204 British pounds)
(Reporting by Alison Lui in Hong Kong and Shilpa Hinduja in
Bangalore, Writing by Brenton Cordeiro,; Editing by Alison
Leung, Roshni Menon)