Synthesis Energy to receive $84m investment from China Energy
Synthesis Energy Systems (NASDAQ:SYMX), a product and service provider to the energy and chemicals markets, said Thursday that China Energy Industry Holding Group will invest roughly US$83.8 million in the company to support its business strategy in China.
China Energy, a Hong-Kong based limited liability corporation, was formed by Beijing-based Zhongjixuan Investment Management for the purpose of investing in Synthesis.
The agreement promises to strengthen Synthesis' balance sheet, providing additional flexibility for the company to pursue its business plan in China, which will include new joint business ventures to develop lower cost coal resources in the country.
Houston, Texas-based Synthesis provides technology, equipment and engineering services used to convert low rank, low cost coal into energy and chemical products.
"This strategy is designed to provide our proprietary technology and equipment to third parties through technology and equipment sales; make investments in projects that we develop, design, build and operate; and exploit unique opportunities to gain access to coal feedstock resources through implementation of our technology," said Synthesis president and CEO Robert Rigdon.
"In addition to opening new doors for future coal gasification projects, we will now have the opportunity to accelerate the development of our existing and future projects in China."
Under terms of the agreement, China Energy will receive approximately 37.3 million shares of newly issued stock at closing, representing an approximate 43.5% stake in Synthesis. China Energy could increase its holding up to a 60%, dependent on it funding the establishment of a coal gasification joint venture.
The deal remains subject to shareholder approvals. Synthesis' shares soared more than 39% on Thursday on the news, to $2.85 as of 11:54am EST.
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