Amendment to Tender-Offer Statement — Going-Private Transaction — Schedule 13E-3 Filing Table of Contents
Document/ExhibitDescriptionPagesSize 1: SC 13E3/A Petrochina Sc 13E-3/A HTML 106K
2: EX-99.(C).1 EX-99.(C).1 Update on Potential Acquisition of HTML 170K
the Minority Interests in Jilin Chemical
3: EX-99.(C).2 EX-99.(C).2 Project 517 - Preliminary Transaction HTML 19K
& Valuation Considerations, Dated May
23, 2005
4: EX-99.(C).3 EX-99.(C).3 Project Chunhui, Dated June 23, 2005 HTML 285K
5: EX-99.(C).4 EX-99.(C).4 Data Book - Interim Update of Trading HTML 142K
& Premium Information, Dated August 3,
2005
6: EX-99.(C).5 EX-99.(C).5 Updated Executive Timetable and Data HTML 225K
Book, Dated October 14, 2005
7: EX-99.(C).6 EX-99.(C).6 Data Book, Dated October 25, 2005 HTML 88K
8: EX-99.(C).7 EX-99.(C).7 Data Book, Dated October 26, 2005 HTML 108K
This statement is filed in connection with (check appropriate box):
a.
o
The filing of solicitation materials or an information statement subject to Regulation 14A,
Regulation 14C, or Rule 13e-3(c) under the Securities Exchange Act of 1934.
b.
o
The filing of a registration statement under the Securities Act of 1933.
c.
þ
A tender offer.
d.
o
None of the above.
Check the following box if the soliciting materials or an information statement referred to in
checking box (a) are preliminary copies: o
Check the following box if the filing is a final amendment reporting the results of the
transaction: o
CALCULATION OF FILING FEE
Transaction Valuation*
Amount of Filing Fee**
$348,250,406
$40,990
*
Estimated for purposes of calculating the amount of the filing fee only. Calculated by
multiplying HK$2.80, the per share tender offer price, by 964,778,000, the total amount of the
H Shares currently outstanding, including H Shares represented by American Depositary Shares,
and using a US$ / HK$ exchange rate of US$1 : HK$7.7570; as quoted by the Federal Reserve Bank
of New York on November 9, 2005.
**
Calculated as 0.011770% of the transaction value.
þ
Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
This
Amendment No. 3 to the Rule 13e-3 Transaction Statement on
Schedule 13E-3, as amended by Amendment No. 1 and Amendment
No. 2 (the
“Statement”), is being filed with the Securities and Exchange Commission by PetroChina Company
Limited, a joint stock limited company incorporated in the People’s Republic of China with limited
liability (“PetroChina”), and Jilin Chemical Industrial Company Limited, a joint stock limited
company incorporated in the People’s Republic of China with limited liability (“Jilin”) pursuant to
Section 13(e) of the Securities Exchange Act of 1934, as amended, and Rule 13e-3 thereunder. Jilin
is the subject company. The Statement relates to the offer by PetroChina to purchase (i) all
outstanding foreign invested shares, par value RMB 1.00 per share (the “H Shares”) of Jilin, at a
purchase price of HK$2.80 per H Share, to the seller in cash, and (ii) all H Shares represented by
American Depositary Shares (“ADSs”) of Jilin, at a purchase price of HK$280.00 per 100 H Shares
represented by each ADS, to the seller in cash, in each case without interest thereon and less any
required withholding taxes and Hong Kong stamp duties, upon the terms and subject to the conditions
set forth in the Composite Offer and Response Document Relating to the H Share Offer Special Class
Meeting of the Jilin H Shareholders, dated November 16, 2005, as
amended and restated on December 9, 2005 (the “Composite Document”), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the “Offer”).
The
information contained in this Amendment No. 3 to the Statement and/or the Composite
Document concerning PetroChina was supplied by PetroChina only, and Jilin takes no responsibility
for the accuracy or completeness of such information. The information concerning Jilin was
supplied by Jilin only, and PetroChina takes no responsibility for the accuracy or completeness of
such information.
The first paragraph after the first question on page 6 of the Composite Document is hereby amended with the insertion of the following sentence at the end of the paragraph:
“After the completion of the H Share Offer, if there are fewer than 600,000 Jilin ADSs which are publicly-held (excluding concentrated holdings, such as PetroChina’s, of more than 10% of Jilin), the NYSE, pursuant to Item 802.01 of the NYSE Listed Company
Manual, may promptly suspend the trading of the Jilin ADSs and file
an application to the SEC to delist the Jilin ADSs from the NYSE,
effective as early as 10 days after the filing of such
application.”
The last sentence of the paragraph after the third question on page 7 is hereby amended and restated as follows:
“Jilin
will no longer file or furnish reports and other information to the
SEC, if
the Jilin ADSs are delisted from the NYSE, as the result of an
application filed by Jilin or the NYSE to the SEC, and the Jilin ADSs and Jilin H Shares are deregistered under Rule 12h-3 under the Exchange Act.”
Item 3. Identity and Background of Filing Person.
The table
on page VI-7 of Appendix VI to the Composite Document is hereby amended by inserting the following row between the first and second row of information regarding Mr. Yu Li:
“General Manager (4/2002-2/12/2005)”
“PetroChina Jilin Branch Company”
“Production and sale of petrochemical and chemical
products”
“No 9. Longtan Street, Longtan District, Jilin City, Jilin Province”
The last sentence of paragraph 13 on page VI-11 of Appendix VI to the Composite Document is hereby amended and restated as follows:
“Jilin will no longer file or furnish reports and other information to the SEC, if
the Jilin ADSs are delisted from the NYSE, as the result of an
application filed by Jilin or the NYSE to the SEC, and the Jilin ADSs and Jilin H Shares are deregistered under Rule 12h-3 under the Exchange Act.”
Item 4. Terms of the Transaction.
The first paragraph of the second question and answer on page 6 of the Composite Document entitled
“If I accept the H Share Offer, may I withdraw my acceptance” is hereby amended and restated in its
entirety as follows:
“If I accept the H Share Offer, may I withdraw my acceptance?
The Initial Offer Period for the H Share Offer will expire at 4:00 P.M. (Hong Kong time) on
Friday, 6 January 2006 (the First Closing Date), unless the H Share Offer is extended or has
previously become or been declared unconditional, or has lapsed or been withdrawn. You may
withdraw an acceptance of the H Share Offer at any time during the Initial Offer Period. The
earliest date on which the H Share Offer will become or be declared unconditional and the Initial
Offer Period can expire is the date of the H Share Class Meeting, which is scheduled for 10:00 a.m.
(Hong Kong time) on Saturday, 31 December 2005. PetroChina has received no action relief from the
staff of the SEC to permit PetroChina to terminate the Initial Offer Period and thereby end
withdrawal rights of Jilin H Shareholders and Jilin ADS Holders from and after the time the H Share
Offer becomes or is declared unconditional. If the H Share Offer becomes or is declared
unconditional after the H Share Class Meeting but before the First Closing Date or, if the H Share
Offer has been extended, before the expiration of such extended period, then the right of Jilin H
Shareholders and Jilin ADS Holders to withdraw acceptances of the H Share Offer will terminate from
and after the time the H Share Offer becomes or is declared unconditional. PetroChina will issue a
press release and publish a newspaper advertisement in a newspaper of national circulation in the
United States on December 23, 2005 (five U.S. business days prior to the date of the H Share Class
Meeting) informing Jilin H Shareholders and Jilin ADS Holders that, if the resolutions approving
the voluntary withdrawal of the listings of the Jilin H Shares and Jilin ADSs are passed at the H
Share Class Meeting, the H Share Offer will become unconditional and the Initial Offer Period will
expire as soon as the condition relating to minimum valid acceptances of the H Share Offer is
satisfied, and that withdrawal rights will thereby terminate. The press release and newspaper
advertisement will advise that Jilin H Shareholders and Jilin ADS Holders who wish to withdraw
their acceptances of the H Share Offer should do so before 31 December 2005 (the date of the H
Share Class Meeting) to ensure that their withdrawal is timely. In addition, PetroChina will file
a copy of the press release and newspaper advertisement with the SEC and the release will be
publicly available on the SEC’s website at www.sec.gov.”
The first paragraph on page I-11 of the Composite Document is hereby amended and restated in its
entirety as follows:
“5.
RIGHT OF WITHDRAWAL
The Initial Offer Period for the H Share Offer will expire at 4:00 P.M. (Hong Kong time) on
Friday, 6 January 2006 (the First Closing Date), unless the H Share Offer is extended or has
previously become or been declared unconditional, or has lapsed or been withdrawn. An acceptor of
the H Share Offer may withdraw his/her/its acceptance of the H Share Offer at any time during the
Initial Offer Period. The earliest date on which the H Share Offer will become or be declared
unconditional and the Initial Offer Period can expire is the date of the H Share Class Meeting,
which is scheduled for 10:00 a.m. (Hong Kong time) on Saturday, 31 December 2005. PetroChina has
received no action relief from the staff of the SEC to permit PetroChina to terminate the Initial
Offer Period and thereby end withdrawal rights of Jilin H Shareholders and Jilin ADS Holders from
and after the time the H Share Offer becomes or is declared unconditional. If the H Share Offer
becomes or is declared unconditional after the H Share Class Meeting but before the First Closing
Date, or, if the H Share Offer has been extended, before the expiration of such extended period,
then the right of Jilin H Shareholders and Jilin ADS Holders to withdraw acceptances of the H Share
Offer will terminate from and after the time the H Share Offer becomes or is declared
unconditional. PetroChina will issue a press release and publish a newspaper advertisement in a
newspaper of national circulation in the United States on December 23, 2005 (five U.S. business
days prior to the date of the H Share Class Meeting) informing Jilin H Shareholders and Jilin ADS
Holders that, if the resolutions approving the voluntary withdrawal of the listings of the Jilin H
Shares and Jilin ADSs are passed at the H Share Class Meeting, the H Share Offer will become
unconditional and the Initial Offer Period will expire as soon as the condition relating to minimum
valid acceptances of the H Share Offer is satisfied, and that withdrawal rights will thereby
terminate. The press release and newspaper advertisement will advise that Jilin H Shareholders and
Jilin ADS Holders who wish to withdraw their acceptances of the H Share Offer should do so before
31 December 2005 (the date of the H Share Class Meeting) to ensure that their withdrawal is timely.
In addition, PetroChina will file a copy of the press release and newspaper advertisement with the
SEC and the release will be publicly available on the SEC’s
website at www.sec.gov.”
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
The bulletpoints after the second paragraph on page 38 of the Composite Document are hereby amended
and restated in their entirety as follows:
“•
On 17 May 2005 representatives of Citigroup met with PetroChina at the
headquarters of PetroChina. During the meeting, Citigroup was asked to assess
the feasibility of the possible consolidation of Jilin. Citigroup made a
presentation which included among other information, a preliminary
sensitivity analysis to determine the relative impact on various financial
ratios of Jilin of varying assumed prices of Jilin H Shares and Jilin A
Shares. This analysis is described below under “ — Summary of Financial
Analyses Prepared by Citigroup”.
•
On 24 May 2005, PetroChina met with its legal advisers and Citigroup to
have a preliminary discussion on the structure of a possible transaction.
Citigroup discussed previously provided materials, dated May 23,2005, analyzing the approval
requirements and timing implications of two possible transaction structures,
namely a two-step proposal involving a share exchange offer, followed
by a subsequent consolidation of Jilin, such as a
merger, and a one-step proposal involving a merger.
•
On 26 May 2005, PetroChina met with its legal advisers and Citigroup
to discuss and compare various consolidation mechanisms, such as a
stand-alone H share offer, dual offers for both Jilin H Shares and Jilin A Shares and
merger, and the execution timetables for the different
structures as well as relevant aspects of precedent transactions.
•
From the end of May to early June 2005, PetroChina continued general
discussions on legal and regulatory issues with its legal advisers and
Citigroup.
•
On 16 June 2005, PetroChina and its advisers had a meeting to discuss the progress of communications with the regulators,
the mechanism for suspension of trading and potential results of the potential transaction.
•
On 23 June 2005, Citigroup sent a draft presentation to PetroChina which
included certain information described below under “— Summary of Financial
Analyses Prepared by Citigroup”.
•
On 28 June 2005, representatives of PetroChina,
Citigroup and China Galaxy had a meeting
to discuss various possible transaction structures.
•
In addition, from 23 June 2005 onwards, PetroChina and its legal
and financial advisers had weekly conference calls to provide an update on
progress and to coordinate the efforts of PetroChina and its advisers in
relation to the potential transaction. Citigroup
sent an interim update of the trading and premium information of
Jilin to PetroChina that was superseded by presentations made by
Citigroup on 25 and 26 October 2005.
•
As discussed below, on 17 August 2005, PetroChina instructed its advisers
to stop work in relation to the potential transaction.”
Page 39 of the Composite Document is hereby amended by adding the following paragraph at the
beginning thereof:
“On 14 October 2005, Citigroup sent an updated timetable and data book to
PetroChina, which included among other information, a premium analysis which is
described below under “— Summary of Financial Analyses Prepared by Citigroup”.”
The second sentence of the second paragraph on page 39 of the Composite Document is hereby amended
and restated in its entirety and is supplemented as follows:
“PetroChina reviewed certain public information about Jilin compiled by Citigroup
and China Galaxy, including peer group comparables, research analysts’ views from
third party investment banks and market data on Jilin, including share price
performance, turnover information and comparisons of trading patterns
of the Jilin A
Shares and Jilin H Shares. PetroChina believes that the
materials provided by China Galaxy to PetroChina do not constitute reports that
are materially related to the H Share Offer for purposes of Item 1015 of
Regulation M-A under the Exchange Act. A summary of the material financial analyses provided by Citigroup
is included below under the subsection 6A “Summary of Financial Analyses Prepared
by Citigroup”.”
The third paragraph on page 39 of the Composite Document is hereby amended by adding the following
sentence after the first sentence thereof:
“A summary of the material financial analyses provided by Citigroup is included
below under the subsection 6A “Summary of Financial Analyses Prepared by
Citigroup.”
Page 42 of the
Composite Document is hereby amended by inserting the following
sentence at the end of the fourth paragraph, after the words “A Share
Offer”:
“Jilin
believes that the materials provided by CICC to Jilin do not
constitute reports that are materially related to the H Share Offer
for purposes of Item 1015 of Regulation M-A under the Exchange
Act.”
Item 6.
Purposes of the Transaction and Plans or Proposals.
Page 52 of the Composite Document is hereby amended with the insertion of the following paragraph after the end of the first paragraph:
“After
the completion of the H Share Offer, if there are fewer than 600,000
Jilin ADSs which are publicly-held (excluding concentrated holdings,
such as PetroChina’s, of more than 10% of Jilin), the NYSE,
pursuant to Item 802.01 of the NYSE Listed Company Manual, may
promptly suspend the trading of the Jilin ADSs and file an
application to the SEC to delist the Jilin ADSs from the NYSE,
effective as early as 10 days after the filing of such
application.”
Item 8.
Fairness of the Transaction.
The second bullet point on page 43 of the Composite Document is hereby amended and restated in its entirety as follows:
“•
The historical results of operations
(including the fact that no dividends have been paid by Jilin for the three
financial years ended 31 December 2004 or for the six months ended 30 June 2005, and
Jilin’s recent net losses primarily due to the high crude oil
prices beyond
Jilin’s control, as well as provision for impairment of, and expenses
relating to writing-off of, fixed assets), financial
condition, assets, liabilities, business
strategy and prospects of Jilin and the nature of the industry in
which Jilin competes, and the competitive and challenging business environment Jilin
may face if crude oil prices remain high and if the prices of Jilin’s primary
products remain controlled by the PRC government, which may adversely impact Jilin’s
future results of operations and the Jilin H Share price.”
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
The last
paragraph on Page 40 of the Composite Document is hereby amended by
inserting the following sentence at the end of the paragraph:
“In
addition, during the period from 31 October 2005 to 15 November 2005,
from time to time, Jilin and each of Jilin’s financial advisors,
namely, Cazenove and Platinum, with respect to the H Share Offer, and
CICC, with respect to the A Share Offer, as well as Jilin’s legal
advisors, communicated by telephone and e-mail with regards to their
work.”
Page 51 of the Composite Document is hereby amended by adding the following subsection before
subsection 7 entitled “Certain Effects of the H Share Offer”:
“6A.
SUMMARY OF FINANCIAL ANALYSES PREPARED BY CITIGROUP
In connection with its consideration of a potential transaction, PetroChina
engaged Citigroup as its financial adviser in connection with the H Share Offer.
Between May 2005 and
October 2005, Citigroup met with certain members of
PetroChina's transaction team on several occasions to discuss, among other things, the summary
financials of Jilin extracted from public filings made by Jilin, the strategic
rationale for the A Share Offer and the H Share Offer and the historical trading
price of Jilin A Shares and Jilin H Shares. See “—Background of the H Share
Offer”. Citigroup was not provided with any non-public information on Jilin and
therefore was unable to, and did not, perform a discounted cash flow valuation of
Jilin.
The following is a summary of the material financial analyses furnished by
Citigroup to certain members of PetroChina's transaction team. Copies
of the materials provided to PetroChina which contain such financial analyses are attached as exhibits to
Amendment
No. 3 to Schedule 13E-3 filed by PetroChina and Jilin with
the SEC on December 22,2005 (“Amendment No. 3 to Schedule 13E-3”). The following summary
does not purport to be a complete description of the analyses performed by
Citigroup or of their presentations to PetroChina. PetroChina did not request,
and Citigroup did not provide, any opinion to either PetroChina or its
shareholders as to the fairness of the Jilin A Share offer price or Jilin H Share
offer price or any valuation of Jilin whether for the purpose of assessing the
fairness of the Jilin A Share offer price or Jilin H Share offer price or
otherwise.
Some of the summaries of financial analyses described below include
information presented in tabular format. In order to understand fully the
financial analyses performed by Citigroup, the tables must be read together with
the text of each summary. The tables alone do not constitute a complete
description of the financial analyses performed by Citigroup.
•
Sensitivity Analysis
Citigroup performed an indicative sensitivity analysis to determine the
relative impact on Jilin’s firm value (being equity plus net debt) to net sales
ratio, firm value to earnings before interest, tax, depreciation and amortization
(“EBITDA”) ratio and price/earning per share (“P/E”) ratio of varying assumed
prices of Jilin H Shares and Jilin A Shares. For example, Citigroup applied a
10%, 20% and 30% premium to the Jilin H Share closing price as of 13 May 2005 of
RMB1.80 and Jilin A Share closing price as of 13 May 2005 of RMB3.32. The
analysis showed that if a 20% to 30% premium was added to the Jilin H Share
closing price and the Jilin A Share closing price as of such date, the impact
would be to bring its valuation in-line with certain selected publicly-traded
petrochemical and oil and gas companies that shared certain characteristics with
the business of Jilin (the “Comparable Companies”). On 26 October 2005, Citigroup
performed this analysis using a range of prices for Jilin H Shares of HK$1.50 to
HK$3.00 in HK$0.25 increments. All share
price data was as of October 25, 2005. This analysis, including implied trading multiples, is provided in full on page 2 of the materials
prepared by Citigroup titled “Data Book”, dated October 26, 2005, which are attached as Exhibit
99(c)(7) to Amendment No. 3 to Schedule 13E-3.
All earnings and EBITDA estimates were based on International Brokers’
Estimates System (“IBES”) consensus estimates of earnings per share and EBITDA for
2005. IBES is an electronic database which gathers and compiles earnings estimates
of publicly traded companies which have been published by research analysts of
international and regional institutional stockbrokers. IBES estimates give an
indication of the views held by institutional stockbrokers in respect of the
earnings prospects of companies covered by IBES. IBES is a public source of
information and can be accessed on Bloomberg and other financial market
information systems. IBES is commonly used by financial advisers as a source of
information. The IBES estimates used were estimates of institutional stockbrokers
and were not prepared by Citigroup. Citigroup has not carried out any independent
verification of such estimates and does not endorse or otherwise pass judgment on
such estimates
Market cap for all classes of shares, which is the sum of Jilin H Shares’ share price
multipled by number of Jilin H Shares outstanding and Jilin A Shares’ share price multipled by
number of legal person shares and Jilin A Shares outstanding. Firm value based on net debt as
of December 31, 2004 from Jilin’s annual report.
(c)
Firm value equals market equity value (based on Jilin share price as of October 25, 2005) plus
straight debt, minority interest, less investments in unconsolidated affiliates and cash (based on
the relevant historical financial figures extracted from Jilin’s annual report for financial year
ended December 31, 2004).
•
Comparable Companies Analysis
Citigroup analyzed on a P/E basis and firm value/earnings before interest,
tax, depreciation and amortization (“FV/EBITDA”) basis, in each case using IBES
consensus estimates of earnings per share and EBITDA for 2005 and 2006, the ratios
of selected Comparable Companies. This analysis was done at various times at the
request of PetroChina, all of which were superseded by the analysis
done on 26
October 2005, which was based on share prices as of 25 October
2005.
As of 25 October 2005, Jilin traded at a substantial premium to the
Comparable Companies. The Comparable Companies for the 26 October 2005 analysis
were Sinopec Shanghai Petrochemical Co. Ltd., China Petroleum and Chemical
(Sinopec), PetroChina, Sinopec Zhenhai Refining & Chemical Co., PTT Public Co., Ltd., National
Petrochemical PCL, Formosa Petrochemicals Corp., Formosa Chemicals & Fibre Corp.,
TonenGeneral Sekiyu KK, S Oil Corporation, Showa Shell Sekiyu KK and Singapore
Petroleum Company. This analysis, including the information of traded petrochemical companies, is provided in full on
page 1 of the materials prepared by Citigroup titled “Data Book”, dated October 26, 2005, which are
attached as Exhibit 99(c)(7) to Amendment No. 3 to Schedule 13E-3. Citigroup made no
adjustments for differences between the businesses of the Comparable Companies and
Jilin or for any other matter.
Market cap for all classes of shares, which is the sum of (i) Jilin H Shares’ share price
multipled by number of Jilin H Shares outstanding and (ii) Jilin A Shares’ share price
multipled by number of legal person shares and Jilin A Shares outstanding. Firm value
based on net debt as of December 31, 2004 from Jilin’s annual report.
(c)
Firm value equals market equity value (based on Jilin share price as of October 25, 2005) plus
straight debt, minority interest, less investments in unconsolidated affiliates and cash (based on
the relevant historical financial figures extracted from Jilin’s annual report for financial year
ended December 31, 2004).
On 23 June 2005, Citigroup had used the same Comparable Companies data as of
22 June 2005 to calculate the average, median, high and low P/E ratio and
FV/EBITDA ratio of the Comparable Companies, in each case using IBES consensus
estimates of earnings per share and EBITDA for 2005 and 2006. Based on such data,
Citigroup then applied a multiple range of 4.5x to 5.5x for the FV/EBITDA ratio
and 6.5x to 7.5x for the P/E ratio to determine a range of implied equity values
and implied firm values for Jilin. This analysis is provided in full on page 27 of the materials prepared by Citigroup titled “Project
Chunhui”, dated June 23, 2005, which are attached as Exhibit 99(c)(3) to Amendment No. 3 to
Schedule 13E-3.
•
Precedent Transactions Analysis
Citigroup performed a precedent transactions analysis which compared the
price paid in precedent transactions to the market price of the target company
prior to the announcement of such transactions. On 23 June 2005, Citigroup
reviewed transactions which it deemed reasonably comparable to the H Share Offer,
occurring from 1 January 2000 through 15 June 2005.
Recent
Transactions in the Petrochemical Industry
TOTAL
LTM
LTM
TRANSACTION
OPERATING
OPERATING
ANNOUNCED
DEAL CLOSE
VALUE
EBITDA
EBITDA
DATE
DATE
BUYERS
SELLERS
KEY ASSETS
US$MM
US$MM
MULTIPLE
5/29/2001
NA
MOL Magyar Olaj- es Gazipari Rt
TVK Rt
49% of TVK Rt.
190
28
6.9x
6/14/2001
NA
CE Oil & Gas
Borsodchem Rt
84% stake in Borsodchem RT
308
49
6.4x
7/25/2001
7/25/2001
Odebrecht
Government of Brazil
58.41% stake in Petroquimica do Nordeste S.A. (Copene)
318
103
3.1x
5/18/2002
6/4/2002
Reliance Industries Ltd
Indian Petrochemicals Co.
46% of petrochemical producer IPCL
913
125
7.3x
7/15/2002
NA
China Electronics Corp
PetroChina Company Ltd
51.6% stake in Gansu Tristar Petrochemical Group Co.
25
4
6.7x
12/29/2004
NA
Sinopec
Sinopec Beijing Yanhua
Merger by absorption of Yanhua’s 30% stake held by the public
494
376
5.2x
High
7.3x
Low
3.1x
Median
6.5x
Average
5.9x
Implied Valuation
FV/EBITDA
6.0x
7.0x
Net Debt
Equity Value
2004 EBITDA
3,740
22,470
26,210
3,967
18,502
22,242
Recent
Transactions in the Refining Industry
LTM
LTM
DEAL
TOTAL
OPERATING
OPERATING
ANNOUNCED
CLOSE
TRANSACTION
EBITDA
EBITDA
DATE
DATE
BUYERS
SELLERS
KEY ASSETS
VALUE US$MM
US$MM
MULTIPLE
7/5/2000
9/1/2000
Ultramar Diamond Shamrock Corp
Tosco Corp
Avon Refinery
818
125
6.5x
7/31/2000
7/16/2001
Tosco Corp
Irish National Petroleum Corp Ltd
Whitegate Refinery and Storage Assets at Bantry Bay
Request for Data Inputs Required for a DCF Valuation
On
23 June 2005, Citigroup provided PetroChina with a request for
information in the form of a template for a discounted cash flow
(“DCF”)
valuation model. The information request template was provided to
illustrate the data inputs that would be required for Citigroup to prepare a DCF valuation and highlighted the need for comprehensive nonpublic information relating to Jilin. For example, Citigroup informed PetroChina that it would require specific pricing information for
Jilin’s products, operating information such as a cost breakdown
and details of future capital expenditure plans in order to perform a
meaningful valuation as well as price projections for each of
Jilin’s products, information relating to the relationship of
product prices to forecast crude prices, information on
cost-breakdown for Jilin’s operations and other non-public information.
To illustrate the workings of the model, Citigroup included data from
third party research analyst reports and populated parts of the
template based on simple assumptions, including management
projections provided in Jilin’s annual report for 2004.
Citigroup’s template used discount rates ranging from 9.6% to 11.3% as an estimate of a weighted average cost of capital
applicable to Jilin. Revenue for each product during the 10 year forecast period from 2005 to 2014
were shown at 2004 levels with the price of raw materials moving in
line with the price of crude oil.
Consistent with this illustrative approach, Citigroup also included a calculation
of a net present value of free cash flows based on the data described above.
Citigroup had insufficient information to determine whether or not these assumptions
were or were not reasonable and so made clear to PetroChina’s
working team that the template in no way represented Citigroup’s
view as to the value of Jilin and should not be viewed or treated as such.
Subsequent to the provision of this template none of the required information was
ever provided to Citigroup. Therefore the figures shown in the DCF template do not in
any way constitute a view or opinion as to the worth of Jilin nor
were or are they intended to
be used for that purpose. Furthermore, the DCF information request
template was provided to PetroChina in draft form,
remained in draft form and was never updated, and there was no
subsequent meeting between Citigroup and PetroChina in which any presentation
was made on DCF valuation. The template played no role in
PetroChina’s assessment of
the transaction or the transaction price and was not material to any
aspect of PetroChina’s consideration of the transaction.
For the
reasons set forth above, Jilin A Shareholders and Jilin
H Shareholders
should not rely in any way whatsoever on the data included or appearing in the DCF template in evaluating whether or not to accept
the A Share Offer or the H Share Offer or otherwise.
•
Premium Analysis
On 14 October, 2005, Citigroup compiled share price data for Jilin H Shares
using a range of reference prices per share from HK$2.23 to HK$2.73 in $0.05
increments and calculating the percentage premium or discount of the reference
price to the Jilin H Share price of HK$2.23 as of 12 October 2005, the initial
public offering price of Jilin of HK$1.59, the 52-week high and low prices of
HK$3.13 and HK$1.38 and the average closing Jilin H Share prices over the prior
10, 20, 30 and 90 day and six-month periods.
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Market Data Analysis
Citigroup compiled certain market trading data of Jilin, including data showing
volumes of Jilin H Shares and Jilin A Shares traded and the prices at which
specified volumes of the outstanding Jilin H Shares and Jilin A Shares had traded.
For example, on 26 October 2005, Citigroup compiled data showing the percentage
of Jilin H Shares and Jilin A Shares that had traded over the prior 10-day, 20-day,
30-day and other periods. As of 21 October 2005, 67.67% of Jilin H Shares traded
below HK$2.55 in the prior 36 day period, close to 100% of Jilin H Shares traded
at or below HK$2.70 in the prior 36 day period and 51.4% of Jilin H Shares traded
at a price of HK$2.50 or above in such period. Looking at the share price performance
during the past two years (from 27 October 2003 through 25 October 2005),
Jilin H Shares traded over HK$2.70 per share for 33 days and during that 33-day period,
83% of Jilin H Shares were traded. During the same period Jilin H Shares traded
over HK$2.80 per share for 13 days, representing 38% of turnover during such 13 day
period. These analyses were based on the daily closing prices of Jilin H Shares and Jilin A Shares.
As of 21 October 2005, close to 50% of Jilin A Shares traded below RMB4.50
in the prior 53 day period, over 80% of Jilin A Shares traded at or below RMB4.80
in the prior 53 day period and 51.9% of Jilin A Shares traded at a price of RMB4.50
or above in such period. From 1 January 2005 through 25 October 2005, the total
volume of Jilin A Shares traded represents approximately 4.8 times the total number
of Jilin A Shares outstanding.
Citigroup also compared trading patterns of Jilin H Shares and Jilin A Shares. In
the 36 day trading cycle through 25 October 2005, close to 100% of Jilin H Shares
traded below the price of HK$2.70. The HK$2.70 price represented a 36.5% premium
to the average Jilin H Share price for the six month period ending on 25 October
2005. Citigroup applied the same premium to the average Jilin A Share price for
the six month period ending on 25 October 2005. At RMB5.04 per
share, the
number of Jilin A Shares which traded below this value during the prior 53 trading
days was equivalent to 99.6% of all Jilin A shares outstanding at such time.
Citigroup also performed this analysis using a Jilin H Share price of HK$2.80,
which represented a 42% premium to the average Jilin H Share price for the six
month period ending on 25 October 2005. Citigroup applied the same premium to the
average Jilin A Share price for the six month period ending on 25 October 2005,
which implied a Jilin A Share price of RMB5.25.”
After due inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this statement is true, complete and correct.
After due inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this statement is true, complete and correct.
