THE BOURSE WHISPERER: Blackgold International Holdings has entered into a share sale agreement to acquire 100 per cent of the issued capital of Chongqing Gouping Shipping Transportation Company (GPST) from Chongqing Guoping Industrial Group.
The Vendor company, Chongqing Guoping is controlled by Yu Guo Peng, who is an executive director and controlling shareholder of Blackgold.
GPST operates a barge transport business along the Yangtze River that ships predominately coal, iron ore and sand.
Chongqing projects, location map, Source: Company announcement
The company fleet consists of nine hollow hull barges capable of carrying bulk commodities or containers, with a total transport capacity of 43,000 tons.
GPST has 145 employees, 12 captains and 12 chief engineers.
As well as utilising its own fleet, GPST also subcontracts other vessels and arranges logistics for customers, providing a mine to customer logistics solution.
GPST’s audited profit before income tax for the year ending 31 December 2010 was 14 million Renminbi (RMB) and unaudited profit before income tax for the nine months ending 30 September 2011 was RMB 15 million.
According to Blackgold’s ASX announcement, independent expert, BDO Corporate Finance (WA), has concluded that GPST to have a normalised earnings before interest, taxes, depreciation, and amortization (EBITDA) of RMB 21 million for the 2010 calendar year, and forecast future maintainable EBITDA of RMB 31 million for the 2011 calendar year.
GPST is managed by Blackgold executive director Jun Ou.
Blackgold International Holdings executive chairman James Tong said the acquisition of GPST is complementary to Blackgold’s current operations.
As a result of the acquisition of GPST, Blackgold will have capabilities and dedicated internal resources covering each link of the value chain in its coal business – from production, transportation, storage to sales and marketing.
Tong said this integrated business model will allow Blackgold to reduce its cost of sales and enhance its profit margin, and also meet its customers’ demand in a timely and cost-efficient manner by providing a whole supply chain solution.