Moody’s: Kunlun Energy unchanged on acquisition news

Moody’s Investors Service said Kunlun Energy Co. Ltd.’s news that it entered into an agreement to acquire PetroChina Kunlun Gas Co., Ltd. will be credit positive.

On Dec. 28, Kunlun Energy signed an agreement with its parent, PetroChina Co. Ltd., to fully acquire Kunlun Gas from PetroChina for a total of RMB 14.8 billion.

This price takes into account a RMB 1 billion special dividend declared by Kunlun Gas to PetroChina, Moody’s said.

Kunlun Energy will pay no less than 30% of the consideration upon the completion of the acquisition, with remaining balance to be settled within 12 months thereafter, the agency said.

If the acquisition completes, the transaction will be credit positive for Kunlun Energy’s operational profile, but the price is material to Kunlun Energy’s financial profile, Moody’s said.

The financial impact of the acquisition on the company will largely depend on the funding structure of the transaction, the agency added.

The acquisition will strengthen Kunlun Energy’s presence in the downstream market, where the company will emerge as one of the major city gas operators in China, Moody’s said.

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