China Aviation Oil To Buy 20.6% Of Singapore Petroleum

THE WALL STREET JOURNAL: China Aviation Oil To Buy 20.6% Of Singapore Petroleum

“also in talks with Shell to buy over the latter’s 40% stake in an oil storage terminal in the northern Chinese port city of Tianjin.”

DOW JONES NEWSWIRES

August 18, 2004 7:57 a.m.

SINGAPORE — China Aviation Oil (Singapore) Corp. (C47.SG) will buy a 20.6% stake in Singapore Petroleum Co. (S99.SG) for S$291.5 million (US$1=S$1.7134) in cash and warrants, the Chinese company announced Wednesday.

In a statement, CAOS said it will pay the vendor, Satya Capital Ltd., S$227 million in cash and issue 208 million warrants that the holder can convert to 208 million SPC shares at an exercise price of S$1.52 a share.

The warrants have a fair value of approximately S$64.5 million, CAOS said.

CAOS, the Singapore-listed unit of China Aviation Oil Holding Co., a state-owned aviation transportation and logistics group, said the proposed acquisition will help it become a fully integrated oil and gas company.

It added at a briefing later Wednesday that it’s also in talks with Shell to buy over the latter’s 40% stake in an oil storage terminal in the northern Chinese port city of Tianjin. The terminal supplies most of the jet fuel used at Beijing’s main airport.

CAOS’ Chinese parent owns 40% of the Tianjin terminal while the Tianjin government holds the remaining 20% stake.

CAOS officials declined to give an estimate on how much the Tianjin investment would cost, except that it would be lower than the price paid for the SPC stake.

The company was on the lookout for more oil-related investments in the region, the officials added.

Satya Capital was formerly known as Kapital Asia Co. Ltd.

According to a recent announcement, Satya owns about 27% of SPC, whose main assets are its half share in Singapore Refining Co., which operates a 285,000 barrels per day refinery, and a network of petrol stations in Singapore.

SPC’s largest shareholder is offshore and marine conglomerate Keppel Corp. (K02.SG), which is in turn part-owned by Temasek Holdings Pte. Ltd., the Singapore government’s investment company.

CAOS said it will fund its SPC purchase through a mix of internal resources and bank borrowings.

SPC shares rose 6 Singapore cents, or 1.9%, to S$3.14 Wednesday, while CAOS shares were suspended. CAOS last traded at S$1.51.

According to CAOS, the S$1.52 exercise price for its warrants represents a premium of 2% over the volume-weighted share price of S$1.49 prior to the date of the announcement.

-By Pang Ai-Lin and Kevin Lim, Dow Jones Newswires; 65/6415-4150;

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