Longwei Petroleum Investment Holding Ltd., an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China ("PRC"), announced that it has commenced operations at its Huajie fuel storage depot in northern Shanxi Province.
Longwei received its first shipment of petroleum to the new Huajie facility last week and began to sell product to customers on October 11, 2012. The Company's engineers and staff have been working on the facility assets since closing to bring it to operational status and begin distribution activities. Longwei finalized the RMB 700 million (approximately US $110.6 million) purchase of the assets of Huajie Petroleum Co., Ltd. ("Huajie"), a fuel storage depot with a 100,000-metric-ton storage capacity, on September 26, 2012.
"The Huajie facility nearly doubles our storage capacity to a total of 220,000 metric tons and extends our reach into the fast-growing industrial region of northern Shanxi Province," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "We are pleased to have closed on the Huajie asset purchase using our own cash resources without dilution to our shareholders."
The Huajie facility is located in Xingyuan Township, Fanshi County (south of the main train station) in northern Shanxi Province, PRC. The assets purchased include fuel storage tanks with a 100,000-metric-ton capacity with accessory facilities and equipment, delivery and distribution platforms, including a dedicated rail spur, and a vehicle loading and unloading station. The purchase also included a 3,000-square-meter office building and land use rights for 98 acres of land adjacent to the main regional rail line. The new facility is in a growing industrial and mining region, approximately 200 kilometers north of Taiyuan.
"We are confident we can quickly ramp up sales at the Huajie facility based on regional demand and relationships we have established," said Michael Toups, Chief Financial Officer of Longwei. "Closing on the Huajie facility has allowed us to increase our regional presence and attract new customers. With the addition of the Huajie facility, we have strengthened our lead as the largest non-state-owned fuel storage and distribution business in the province."
The Company recently reported revenues of US $510.6 million and net income of US $65.1 million for the fiscal year ended June 30, 2012. At the June 30, 2012 fiscal year-end, the Company reported total assets of US $342.3 million and a book value per share of $3.31.