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Brightoil announces USD 396 million capital injection to Zhoushan storage project

10 Dec 2020

Brightoil Petroleum (Holdings) Limited (Brightoil) on Wednesday (9 December) published an announcement regarding capital injection into its Zhoushan storage project. 

Brightoil said it has been negotiating with various potential buyers in respect of the sale of all or part of the its interests in Zhoushan oil storage and terminal facilities, and on 7 January 2020, Brightoil signed a non-binding “Zhoushan Project Cooperation Framework Agreement” with 深圳市鹽田港集團有限公司 (Shenzhen Yan Tian Port Holdings Co.).

After more than one year of negotiations, on Wednesday, 9 December, Brightoil successfully signed the Share Subscription Agreement and all required supporting agreements with Shenzhen Yan Tian Port Holdings, whereby it will subscribe to 90% of the shares in Brightoil Petroleum Group Co. Ltd. (HK Brightoil) through capital injection for the subscription price of RMB2.591 billion (USD 396 million).

Both parties have agreed that the fair market value of HK Brightoil’s equity interest in the Zhoushan project is RMB5.89 billion (after the project is complete), including the construction funds that need to be injected for the completion of the project.

Shenzhen Yan Tian Port Holdings will be responsible for the arrangement of the subsequent construction funds, but the amount will be subjected to the limit of the agreed RMB2.5 billion.

As part of the agreement, any excess of the construction funds according to the final completion accounts will be deducted from the subscription price and the shortfall to be made up to the subscription price.

The subscription includes 100% equity interests in Brightoil Petroleum Storage (Zhoushan) Co Ltd and 55% equity interests in Zhoushan Brightoil Terminal Co Ltd held by HK Brightoil.

Shenzhen Yan Tian Port Holdings will pay the subscription price by installments according to the progress of the project, and both parties will cooperate to complete the project construction in the future.

Brightoil said it believes the transaction is beneficial to the company as it will be able to carry on with the construction of the project without the need to inject a substantial amount of capital. 

Furthermore, the transaction would generate cash income to the company, which is conducive to the smooth completion of the Brightoil’s debt restructuring and further improving the its assets and

business structure, while allowing the company to retain 10% of equity interests in HK Brightoil as a long-term investment.

After the completion of the subscription, Brightoil said its future development will remain focused on its upstream oil and gas field business.

Earlier developments of Brightoil (since late 2017 to date) can be found in the search results here

Photo credit: Brightoil
Published: 10 December, 2020

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