Guangdong Zhenrong Energy Co., backed by a Chinese state-owned company, offered as much as HK$200 million ($25.8 million) for a controlling stake in Titan Petrochemicals Group Ltd. (1192)
Guangdong will pay between HK$150 million and $200 million for a 51 percent holding via a share sale, Titan said yesterday in a statement to the Hong Kong stock exchange. Guangdong also offered as much as HK$1.3 billion to acquire a stake owned by Warburg Pincus LLC, subject to the dismissal of winding-up proceedings against the company.
“We hope Titan shareholders can seriously consider it,” Li Hui, a Guangdong-based spokesman at the acquirer, said by telephone today. “It’s too early to publicly comment on the matter beyond Titan’s filing to the exchange.”
Saturn Petrochemical Holdings Ltd., a special-purpose vehicle of private-equity firm Warburg Pincus, filed a winding- up petition against Titan in the Supreme Court of Bermuda July 5. Titan, which provides services including oil and storage transportation in the Asia-Pacific region, said it is in shareholders and creditors’ interest to pursue talks on the deal.
Titan shares, which have fallen 22 percent this year, were suspended in Hong Kong on June 19 ahead of a company announcement. The stock remains halted, it said today.
The company is still assessing the offer and a deal is not certain, Titan said.
Guangdong Zhenrong, which trades oil products, non-ferrous metals, coal and chemicals, will also provide short-term financing of as much HK$320 million to Hong Kong-based Titan, according to the filing. Guangdong is 44.3 percent owned by state-owned Zhuhai Zhenrong Co., Titan said in the statement.
Zhuhai Zhenrong was sanctioned by the U.S. in January for gasoline sales to Iran between July 2010 and July 2011, the U.S. State Department said in a statement Jan. 13.
Warburg has invested more than $215 million in the Titan group of companies since 2007, according to the petition filed in Bermuda. Titan hasn’t been profitable in any of the past five years, and its liabilities at the end of last year exceeded its assets by HK$1.24 billion, according to the petition.
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