C&G to sell WTE business and assets in China for S$389.7m

As focus shifts to Southeast Asia.

SGX Mainboard-listed Waste-to-Energy investor and operator C&G Environmental Protection Holdings Limited (C&G) has announced that its wholly-owned subsidiary, C&G Environmental Protection (Hong Kong) Company Limited (C&G (HK)) has entered into a conditional acquisition agreement with Grandblue Environment Co. Ltd (Grandblue) in relation to the Proposed Sale of the entire shareholdings in C&G Environmental Protection (China) Company Limited.

Under the acquisition agreement, the Group will sell its WTE business and assets (including concession rights) and its principal operating subsidiaries in China to Grandblue for RMB1.85 billion (approximately S$389.7 million ) which will be satisfied in cash and Grandblue shares. The principal terms of acquisition agreement are substantially the same as Framework Agreement entered into 23 December 2013.

Upon execution of the acquisition agreement, the Group will deploy the proceeds to fund the expansion of the Group's WTE business and other environmental related projects in the Southeast Asian markets, as well as working capital for its existing projects. Further to this, the Group intends to distribute a portion of the proceeds as special dividend to its shareholders.

Completion of the Acquisition Agreement is subject to relevant government and regulatory approvals from both the People’s Republic of China and Singapore, as well as C&G’s shareholders. C&G will hold an extraordinary general meeting to seek the approval of the shareholders for the Proposed Sale in due course.

Mr. Lin Yan, Executive Chairman and CEO of the Group said, "We are delighted to have concluded negotiations and reached a more definitive acquisition agreement with Grandblue for the sale of our China business in just over a month of signing the Framework Agreement. As we turn our attention to the emerging WTE space in Southeast Asia and explore the business opportunities in other environmental related businesses such as the provision of technology advice, equipment and installation services for the treatment of industrial waste water and air pollution (PM2.5) by way of investment, acquisition or strategic alliance, we hope that our stakeholders, including shareholders will support our continual transformation ahead.”

With the sale of its China businesses and assets to Grandblue, C&G will shift its focus to the WTE industry in Southeast Asia. With increasing urbanisation and growing green concerns, governments are increasingly seeing ways to deal with their municipal waste in a more environmentally friendly manner.

Most recently, on 22 January 2014, C&G through its joint-venture company, C&G Padu Sdn Bhd (C&G Padu), received a letter of support from the Economic Planning Unit of the Malaysian state of Terengganu for the development of an 800 tonnes/day WTE Plant for a concession period of 30 years.

C&G Padu will enter into negotiations with the State Government of Terengganu on the terms of the investment and seeks to obtain all necessary approvals, including but not limited to the Renewable Energy Power Purchase Agreement with Tenaga Nasional Bhd, Malaysia’s power distribution company. The Terengganu WTE project is subject to a negotiation process and is expected to contribute financially to the Group upon commencement of operations.

"Malaysia is an interesting market to be in and its government has been seeking means to grow their energy generation capabilities to meet increasing demand in their developing states. We are delighted to be able to contribute to Terengganu's waste management and power generation infrastructure and look forward to serving Malaysian citizens well as we explore various opportunities in the country.

“Southeast Asia presents very exciting prospects and we intend to further expand our presence in the region through investments into new projects or with partners with immense on-the-ground experience. We are also open to exploring various other opportunities in the environmental sector that complement our WTE business such as air or water purification. As a green-focused company, it is our responsibility to protect the environment and ensure its sustainability for the benefit of future generations", concluded Mr. Lin.