You are here

AEI Corp enters into framework agreement with China's Zhongneng Intl Gas for LNG business activities

ALUMINIUM producer AEI Corporation on Monday said it has entered into a "framework agreement" with Zhongneng International Gas Co (ZNI) to potentially collaborate on business activities involving liquefied natural gas (LNG).

This comes after the company last month flagged that it could be placed on the Singapore Exchange's (SGX) watch list. In a bourse filing on May 24, AEI noted that it has recorded pre-tax losses for the three most recently completed consecutive financial years, with its six-month average daily market cap as at May 24 standing at S$36.98 million, which is below SGX's requirement of maintaining a market cap of at least S$40 million.  

Among other things, Beijing-incorporated ZNI is in the business of importing and purchasing LNG, warehousing logistics and equipment manufacturing. Zhongneng International Petrochemical Co, which is a China state-owned enterprise, holds a 51 per cent stake in ZNI. 

As part of the proposed collaboration, ZNI will appoint AEI to act as its agent to purchase at least six million tonnes of LNG annually from international suppliers, and AEI will work with ZNI to purchase LNG ISO containers used on the Yangtze River Basin, the company said. 

Both parties will also incorporate a joint venture entity in Shanghai to undertake LNG trading and logistic activities. This entity will supply LNG for power generation to serve ZNI's electrical power customers. 

In addition, ZNI has agreed to AEI's participation in the investment and construction of port facilities, and the operation of LNG ISO containers projects located along the Yangtze River. 

AEI also plans to participate in the establishment of structured funds for the related LNG logistics facilities and trade investment, the company noted. 

It added that the proposed collaboration does not constitute any binding obligations, and is subject to the parties entering into definitive agreements. 

AEI shares closed at 66.5 Singapore cents on Friday, up 11.5 Singapore cents, or 20.9 per cent. As at June 14, the company had a market cap of about S$38.4 million. 

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to