In May 2009, the company entered into an equity transfer agreement to acquire 18% of Jianhe Coal. Pursuant to the agreement, the stockholder owning the other 82% of Jianhe Coal guaranteed the company first priority rights to purchase the remaining shares of Jianhe Coal within the 24-month period following execution of the agreement.
The company will be paid proportionate semi-annual dividends based on its 18% ownership. Total dividends for Jianhe Coal will be no less than 80% of its annual net profit.
Zhu Liping, chairman and CEO of Puda Coal, said: “Leveraging our status as a consolidator of eight coal mines in Pinglu County, we are applying to be a consolidator in the coal reserve area where Jianhe Coal is located. We are confident that our strategic transition upstream into the coal mining business will increase our profitability and maximize our shareholder value.”
Puda Coal currently possesses 3.5 million metric tons of annual coking coal capacity. Shanxi Province provides approximately 20-25% of China’s coal output and supplies nearly 50% of China’s coke.
