News for 'GU' - (Gushan Environmental Energy Limited Announces the Impact of New Notice Clarifying the PRC Consumption Tax Exemption, the Signing of an Agreement to Acquire an Additional 8% Beneficial Ownership Interest in Mianyang Jin Xin Copper Limited and the Granting of Share Options Clarification of PRC Consumption Tax Exemption)
NEW YORK, Jan. 18, 2011 /PRNewswire via COMTEX/ -- Gushan Environmental Energy
Limited ("Gushan" or the "Company"; NYSE: GU), a leading
producer of biodiesel in China, today announced that it intends to resume
production at Fujian Gushan Biodiesel Energy Co., Ltd., or Fujian Gushan, and to
commence production at Chongqing Gushan Bio-Sources Energy Co., Ltd., or
Chongqing Gushan, and Hunan Gushan Bio-Sources Energy Co., Ltd., or Hunan
Gushan, in the second quarter of 2011 following a clarification by the Ministry
of Finance of the People's Republic of China, or the Ministry of Finance, and
the State Administration of Taxation of the People's Republic of China, or the
SAT, that pure biodiesel made from waste animal fat or vegetable oil is exempt
from consumption tax in China.
On December 24, 2010, the Ministry of Finance and the SAT issued Caishui [2010]
No. 118, Notice Regarding the Exemption from Consumption Tax on Pure Biodiesel
Made from Waste Animal Fats or Vegetable Oils ("Caishui 118"). According
to Caishui 118, the production of pure biodiesel is exempted from consumption
tax in China, provided that (i) waste animal fats or vegetable oils make up at
least 70% of the raw materials used in producing the biodiesel, and (ii) the
biodiesel produced satisfies certain quality standards previously issued by the
General Administration of Quality Supervision, Inspection and Quarantine and the
Standardization Administration of the People's Republic of China in January
2007. Caishui 118 is effective immediately and applies retroactively to January
1, 2009, such that any consumption tax paid on any such biodiesel since January
1, 2009, will be refunded.
Gushan expects that biodiesel produced at all of its production facilities will
satisfy the conditions set forth by Caishui 118 and so qualify for the
exemption. As such, the Company is preparing to resume production of biodiesel
at Fujian Gushan and to commence biodiesel production at Hunan Gushan and
Chongqing Gushan in the second quarter of 2011.
In addition, the Company expects both Sichuan Gushan Vegetable Fat Chemistry
Co., Ltd., or Sichuan Gushan, and Shanghai Gushan Bio-Energy Technologies Co.
Ltd., or Shanghai Gushan, to resume production in the second quarter of 2011
pending the relocation of the Company's Sichuan production facilities and the
resolution of a previously disclosed legal dispute with a construction
contractor of Shanghai Gushan, respectively.
As previously disclosed, the Company recorded a provision for liability under
the consumption tax of approximately RMB114 million as of September 30, 2010.
The Company expects to reverse this provision in the fourth quarter of 2010.
However, until such results are reviewed and finalized, the Company cannot
confirm that this reversal will be made.
While Gushan is pleased with the favorable outcome of the consumption tax issue,
the high and rising cost of feedstock is adversely affecting the Company's
profitability in its biodiesel business. Consequently, Gushan is currently
negotiating with the local government of Mianyang to be appointed as the
exclusive collector and processor of used cooking oil in the regions under its
jurisdiction. The Company plans to pursue similar appointments from the local
governments of other regions in which it operates. Additionally, due to
continuous problems with the quality of the castor bean produced caused, in
part, by the climate in Indonesia, Gushan plans to terminate its castor bean
supply contract with its Indonesian supplier. To better control costs, the
Company is exploring the possibility of developing an internal feedstock
production capability within China. The Company believes that by developing an
internal feedstock production capability, it may be able to produce feedstock at
a lower cost than could be obtained from third-party suppliers. The Company can
give no assurance that any of these efforts will be successful.
Signing of Agreement to Acquire an additional 8% Beneficial Ownership Interest
in Mianyang Jin Xin Copper Limited
Gushan announced today that, effective December 31, 2010, it has entered into a
definitive agreement (the "Agreement") to acquire an additional 8%
beneficial ownership interest in its 67%-owned subsidiary, Mianyang Jin Xin
Copper Company Limited ("Jin Xin"), a metal recycler serving the power
wire and cable industries, from Jin Xin's minority shareholders for a total
consideration of USD6,447,762, of which approximately USD3,731,343 will be lent
by the selling shareholders to Jin Xin. Following the consummation of the
Agreement, Gushan will beneficially own 75% of Jin Xin.
As previously disclosed, in November 2010 the Company acquired a 67% beneficial
ownership interest in Jin Xin for consideration of 24 million ordinary shares of
the Company to be held in escrow and released subject to adjustment pursuant to
an earn-out arrangement, and a capital contribution to Jin Xin of RMB30.0
million (approximately USD4.5 million).
Granting of Share Options
Gushan announced today that on January 11, 2011, its Board of Directors granted
share options exercisable for a total of 4,000,000 ordinary shares (400,000
American Depositary Shares ("ADSs")) of the Company to 17 individuals,
including 1,000,000 ordinary shares (100,000 ADSs) to 8 employees of Gushan's
wholly-owned subsidiaries and 3,000,000 ordinary shares (300,000 ADSs) to 9
employees of Jin Xin. These options have an exercise price of USD0.61 per
ordinary share (as adjusted to USD6.10 per ADS) of the Company. The options will
vest one third on each of the first, second, and third anniversaries from the
date of grant. The options will expire ten years from the date of grant. The
options have been granted pursuant to the Company's share option scheme. The
purpose of the option grants is to encourage the retention of personnel in a
competitive market place. Together with those share options previously granted
(taking into account those share options which have been forfeited and
cancelled), there are 12,154,000 ordinary shares (1,215,400 ADSs) issuable upon
exercise of outstanding share options and there are 1,529,194 ordinary shares
(152,919 ADSs) available for future issuance upon the exercise of future grants
under the share option scheme.
About Gushan Environmental Energy Limited
Gushan is a leader in the PRC biodiesel industry, in terms of annual production
capacity, and one of the leading biodiesel producers in Asia, in terms of
nominal capacity. Gushan produces biodiesel, a renewable, clean-burning and
biodegradable fuel and a raw material used to produce chemical products,
primarily from vegetable oil offal and used cooking oil, and by-products from
biodiesel production, including glycerine, plant asphalt, erucic acid and erucic
amide. Gushan sells biodiesel directly to users, such as marine vessel operators
and chemical factories, as well as to petroleum wholesalers and individual
retail gas stations. The Company has seven production facilities, located in the
Sichuan, Hebei, Fujian and Hunan provinces and in Beijing, Shanghai and
Chongqing, with a combined annual production capacity of 390,000 tons. Gushan's
Hebei and Beijing production facilities are currently in operation. Gushan also
operates a copper recycling business through Mianyang Jin Xin Copper Company
Limited ("Jin Xin"), a 67%-owned subsidiary, that manufactures copper
rods, copper wires and copper granules from recycled copper in Sichuan. Jin Xin
has one plant in Sichuan, with a daily production capacity of approximately 160
tons of recycled copper products.
