China Natural Gas equity sale, $53 million stalking horse bid approved

By Kali Hays

New York, Nov. 21 – China Natural Gas, Inc. Chapter 7 trustee Alan Nisselson received approval of bid procedures related to the sale of the company’s 100% equity interest in Shaanxi Xilan Natural Gas Equipment Co., Ltd., according a Nov. 21 order from the U.S. Bankruptcy Court for the Southern District of New York.

The court also approved an asset purchase agreement with joint stalking horse bidder Abax Nai Xin A Ltd. and Abax Lotus Ltd. that includes a cash offer of $250,000 plus an agreement of Abax to reduce the total aggregate amount of the outstanding obligations owed by China Natural to Abax by $53 million.

The Abax parties are holders of senior secured notes totaling about $57.44 million.

As previously reported, Abax will not assume any related liabilities and is entitled to a breakup fee of $25,000 and expense reimbursement up to $100,000 if it is not the successful bidder, according to the motion.

Under the approved bid procedures, additional qualified bids must be accompanied by a $125,000 cash deposit and be greater than the total value of Abax’s bid, including the breakup fee and expense reimbursement.

If another qualified bid is received, an auction for the assets will be held on Dec. 12 with a sale hearing scheduled for Dec. 16.

Upon filing the bid procedures, Nisselson said that he is not “actively seeking higher or better offers in light of the extensive marketing effort previously conducted and because of the limited amount of time and resources available to conduct this sale.”

Based in Xi’an, China, China Natural Gas is a provider of pipeline natural gas for industrial, commercial and residential use and compressed natural gas for vehicular fuel. The Chapter 11 case was filed on Feb. 8, 2013 under case number 13-10419.

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