China Qinfa (00866) has announced that after trading hours on June 25, 2024, the seller Qinfa Investment Limited (a wholly-owned subsidiary of the company) and the buyer Zhejiang Energy International Co., Ltd. (as guaranteed by the company) have entered into a conditional sales agreement for the sales shares representing 40% equity interest of the target company Liyuan Development Co., Ltd., at a consideration of RMB 2.95 billion, which may be adjusted. The seller is seeking to monetize part of its investment in SDE (PT Sumber Daya Energi), in exchange for cash. The consideration received by the seller will mitigate its financial pressure on capital expenditures and loan repayments. As the buyer's state-owned power plants have continuous demand for coal, the seller will have a stable source of income after entering into a coal supply agreement.

The announcement stated that the buyer's controlling company is a state-owned enterprise in China that owns a state-owned power plant in China and is seeking stable and reasonably priced coal sources for its power plants in China. Through the purchase of sales shares, the buyer will be able to invest in overseas coal mines with sufficient coal reserves.

The seller is seeking to monetize part of its investment in SDE (PT Sumber Daya Energi), in exchange for cash. The consideration received by the seller will mitigate its financial pressure on capital expenditures and loan repayments. After entering into a coal supply agreement, the seller will have a stable source of income since the buyer's state-owned power plants have continuous demand for coal.