Pingtan Marine Enterprise Ltd. an integrated marine services company in the People’s Republic of China (PRC), announced its unaudited financial results for the third quarter and nine-months ended September 30, 2013.
As previously announced in July 2013, the company received an offer from the chairman and CEO, Mr. Xinrong Zhuo, to acquire the business and operating assets of our wholly-owned dredging subsidiary, CDGC, and its PRC operating subsidiaries in exchange for:
– Forgiveness of the company’s current $155.2 million 4% promissory note due on June 19, 2015;
– Transfer to the company of the 25-year exclusive operating rights for 20 new fishing vessels, with such rights appraised at $216.1 million by an independent, globally recognized appraiser, BMI Appraisals Limited;
– Forgiveness of the company’s current accounts due to CDGC with amount $172.1 million.
Subsequent to the receipt of the fairness opinion on the proposed transaction from independent financial advisor, Duff & Phelps LLC on October 28, 2013, the Board, excluding Mr. Zhuo, and the company’s Senior Officer, Mr. Bin Lin, due to their interest in the proposed transaction, approved moving forward with the transaction. The Board is evaluating any potential alternative proposals received during the 30 day period beginning October 28, 2013 and the transaction is expected to close during the fourth quarter of 2013. Assuming the proposed transaction closes, the company will own or have exclusive operating rights to 126 fishing vessels and licenses.
Third Quarter 2013 Management Comments
Mr. Xinrong Zhuo, chairman and CEO of the company, commented: “We are pleased with our efforts in expanding our fishing business, as we reported improved sales and gross margin during the period. This increased margin expansion was driven by our operations reaching a greater size and scale, which we believe will continue to improve as we grow. Pingtan’s operating costs are largely tied to volume, as our public company costs are relatively fixed, and our labor and overhead costs currently provide operating leverage to grow.
“Increasing our total volume is also important in our pricing negotiations with fuel providers, distributors and exporters, while also opening the possibility to sell to end markets directly. We believe that the recent notification by the Ministry of Agriculture restricting the number of new fishing licenses operating in international waters will help provide an important barrier to entry by new competitors into our markets. We are looking forward to beginning to report our results for entire quarterly period with all of our new vessels operating at full capacity, and will continue to keep our shareholders updated as Pingtan progresses in its plans.”
Press Release, November 15, 2013