DLA Piper Advises on $50 Million NASDAQ Public Offering of China Natural Gas

10 September 2009 LawFuel.com – China, Hong Kong, New York ― DLA Piper advised China Natural Gas Inc. on its successful US$50 million public offering on the NASDAQ Global Market on 9 September 2009 (NASDAQ stock code: CHNG). The partners leading this deal were Gene Buttrill and Rocky Lee, with core team members Jenny Liu from the Beijing office and Tim Sung from Hong Kong. The success of this cross-border transaction was also enabled by the support of lawyers from DLA Piper’s US offices, including partner Steve Pidgeon and associate David Pendergast from Phoenix, and partner Jack Kantrowitz and associate George Yu from New York.

China Natural Gas priced a public offering of 5,725,000 shares of its common stock on 3 September 2009 at US$8.75 per share. The offering was completed through a confidential road show to US institutional investors, with Roth Capital as the sole book runner.

The net proceeds from the offering will be used for the construction of a liquefied natural gas facility, the acquisition of eight CNG fueling stations, the purchase of eight CNG trucks to transport CNG and the establishment of a joint venture company with China National Petroleum Corporation Kunlun Natural Gas Co., Ltd., as well as for general working capital purposes.

“This is a major deal on many fronts – for our client’s sophisticated expansion plans, for the burgeoning clean energy sector in China and for the environment. It was also a good opportunity for us to work on another cross-border deal with our colleagues in the United States,” said Gene Buttrill, partner in the US Capital Markets team in DLA Piper’s Hong Kong office and Head of the Technology Sector for Asia. “We believe the success of the offering evidences strong interest from the US institutional investors for equity in PRC growth companies. We look forward to working with more companies in this space.”

“The amount of activity in China’s clean energy sector and a Chinese government increasingly focused on environmental solutions is pushing out some excellent opportunities for domestic and overseas investors,” said Rocky Lee, Asia Head of Private Equity & Venture Capital of DLA Piper. “With natural gas being the cleanest of all fossil fuels, this deal is particularly significant as part of China’s shift towards becoming a serious clean energy player. We expect to see more and more overseas investors seizing strategic opportunities in China’s natural gas and clean energy space in the future.”

“This offering is another example of our ability to help clients meet ambitious targets in a sector tipped to become one of the most vital in China’s future and continued growth. Because of the scale and complexity often involved in energy-related deals, we are continuing to invest more and more in this field to help clients make the best decisions,” said Alastair Da Costa, Asia Managing Director of DLA Piper. “We had a great team in Asia working on this deal together with their US counterparts. They’ve shown precisely the expertise and knowledge needed to assist clients with their cross-border expansion plans during challenging times.”

About China Natural Gas

China Natural Gas, Inc. is one of the leading providers of pipeline natural gas for industrial, commercial and residential use and compressed natural gas for vehicular fuel in Xi’an, China. It is the first China-based natural gas company publicly traded in the United States. It currently owns and operates a 120 kilometer long compressed natural gas pipeline in Xi’an, a fast growing Chinese city supported by a population of approximately 8.5 million which is the “gateway” to the broad Western regions of China. China Natural Gas operates in several business segments: retail natural gas at company-owned natural gas fueling stations; end user delivery of natural gas services to residential, commercial and industrial customers; and conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. The city of Xi’an has approximately 20,000 taxis, 5,000 buses and 3,000 special purpose vehicles that are powered by compressed natural gas. http://www.naturalgaschina.com/

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