On July 20, 2023, Xinjiang Xintai Natural Gas Co., Ltd. (“Xinjiang Xintai Natural Gas” or the “Company”, stock code: 603393.SH) paid a total consideration of around HKD 2.704 million for taking AAG Energy Holdings Limited (“AAG Energy”, stock code: 2686.HK) private by way of a scheme of arrangement (the “Transaction”). JunHe acted as the Company’s legal counsel in this Transaction.
Xinjiang Xintai Natural Gas is a China-based company listed on the A-share market. It is primarily engaged in urban natural gas transmission, distribution and sales, home installation and coalbed methane mining. Since 2012, JunHe has served as the legal counsel to the Company in respect of its pre-IPO financing, listing on the A-share market, its post-IPO acquisition of the controlling stakes in AAG Energy, its cooperation with PetroChina Kunlun Gas Company Limited in relation to the equity interest held by the Company in ten of its subsidiaries in Xinjiang, and its private placement of A shares.
In 2018, JunHe acted as the PRC legal counsel to the Company and assisted it in acquiring controlling stakes in AAG Energy. As a result of this acquisition, the Company expanded its primary business to include the development and sales of coalbed methane and thus created a complete industrial chain. AAG Energy is listed on the main board of the Stock Exchange of Hong Kong (the “SEHK”) and has become a platform for the Company to operate in the international capital market. The Transaction will help to improve the Company’s control over AAG Energy and the efficiency of its resource allocation.
The Company shall, through its wholly owned sub-subsidiary, Liming Holding Limited (“Liming”), make a tender offer to the board of directors of AAG Energy to take AAG Energy private by acquiring the equity interest held by the proposed shareholders in AAG Energy at a price of HKD1.85 per share in cash, subject to the fulfillment of certain conditions precedent. The Transaction involved the privatization of AAG Energy in accordance with Section 86 of the Companies Act of the Cayman Islands. Upon completion of the scheme of arrangement, AAG Energy shall become a wholly owned subsidiary of Liming and be delisted from the SEHK.
Given that the target of the acquisition is a Cayman Islands company listed in Hong Kong, the Transaction had to comply with the laws, regulations and listing rules in mainland China, Hong Kong and the Cayman Islands. The Transaction necessitated coordination work in terms of the transaction rules in different jurisdictions, the overall scheme, the steps of the Transaction, the timing of the information disclosure, the domestic and overseas announcements and the content of the legal documents. The target company had a variety of assets, including coalbed methane exploration and development which were distinguished from the other assets by their unique nature. In order to ensure the smooth implementation of the Transaction, JunHe’s team paid close attention to the updates about each party to the Transaction and the particulars of the acquired assets during due diligence. Their outstanding capabilities and professional services were unanimously recognized by the client and other intermediaries.
After all the necessary approvals, filings and authorizations were obtained, the scheme of arrangement for the Transaction became effective on July 11, 2023. AAG Energy was delisted from the SEHK on July 12, 2023.
JunHe acted as the PRC legal counsel to the Company and advised the client throughout the entire process. JunHe provided the Company with legal services including the structuring of the Transaction, advice on applications for governmental approvals/filings, compliance guidance, the drafting and review of A-share related announcements and legal opinions, the review of the restructuring report and responding to feedback from the Shanghai Stock Exchange. JunHe’s team also issued supplemental legal opinions. Thanks to JunHe’s support, the Transaction was completed on schedule. During the Transaction, on February 17, 2023, the CSRC released the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises (the “New Rules”). JunHe assisted the Company and the other intermediaries in making timely communications with the Department of International Affairs of the CSRC and prepared a report on material matters in respect of the privatization of AAG Energy in accordance with the New Rules. JunHe’s team was highly recognized by the Company and the other intermediaries for its professional, efficient and diligent services.