UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): December 12, 2009
China
New Energy Group Company
(Exact name of Registrant as specified in its charter)
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Delaware
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001-32691
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65-0972647
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(State
or other jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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20/F, Center Plaza, No.188 Jie Fang
Road
He
Ping District, Tianjin, 300042
People's
Republic of China
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (011)-86-22-5829 9778
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities
Act(17CFR230.425)
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o
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Soliciting
material pursuant to Rule14a-12 under the Exchange
Act(17CFR240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under theExchange Act
(17CFR240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under theExchange Act
(17CFR240.13e-4(c))
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Item
1.01 Entry Into a Material
Definitive Agreement.
On
December 12 2009, Qinhuangdao Chensheng Gas Co., Ltd., our indirect wholly-owned
subsidiary (“Qinhuangdoa”),
entered into an Equity Interest Purchase Agreement (the “Agreement”) to
acquire all of the outstanding equity interest of Zhanhua Jiutai Gas Co., a PRC
company (“Jiutai”), from the 5
shareholders of Jiutai named therein (the “Transferors”). The Agreement was subject to the
approval of the Board of Directors of the Transferee which approval was granted
on November 26, 2009
Under the
Agreement, Qinhuangdao agreed to purchase 100% of the outstanding equity
interest of Jiutai from the Jiutua Shareholders for a total purchase price of
RMB 16,500,000 (approximately $2,426,343 US Dollars). The
purchase price was based on an agreed value of the assets by both
parties.
The
following conditions are required to be satisfied prior to the closing of the
transaction:
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1)
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All
necessary permissions, instructions, consents, licenses, approval or
authorization, related to the legality, validity or enforceability of the
selling of the transferred equity, purchasing the transferred equity,
issued by the relevant government authorities, departments or other
organizations have been obtained or made;
and
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2)
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All
the necessary procedures, formalities and procedures related to the
transferring and purchasing the transferred equity have been completed or
performed.
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The
purchase price is payable in three installments. The first installment of 58% of
the total purchase price is payable within 13 business days of the date of the
agreement
The
process of completing the equity transfer will not begin until after the
delivery of the first installment. If payment of the first
installment is not made the agreement will be terminated. Following
receipt of the first payment Transferors must complete the following conditions
within 10 working days otherwise the obligation to pay the second installment
will terminate:
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1)
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Increase
the registered capital of Jiutai to at least RMB 5 million at their own
expense and update the registration with the local industrial and
commercial authority. (The parties agreed that each Transferors
will transfer all of their equity to the Transferee after
completion of the updated registration of the increase of the registered
capital and the provisions of the agreement related to the
transfer of equity between the parties apply to transfer of equity after
such capital increase.);
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2
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2)
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obtain
a written confirmation of the transfer from the Zhanhua government;
release public statements in the local media, where Jiutai is located, to
announce that: neither the Transferors or Jiutai are subject to any
pending or threatened litigation or arbitration cases, or event
or circumstance that might result in the freezing or seizure of any of its
assets and that none of such events are
threatened;
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3)
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there
shall be no outstanding guaranty provided by Jiutai for any other
person/entity;
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4)
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prior
to the completion of the transfer, all rights (including the accounts
receivable) with respect to contracts entered into prior to the transfer
of the equity) and liabilities (contingent or otherwise) and obligations
(including accounts payable) with respect to contracts entered into prior
to the transfer of the equity of Jiutai shall be transferred to
and assumed by the Transferors and Transferee shall be indemnified against
any such losses;
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5)
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complete
all necessary update registration procedures relating to the equity
transfer including but not limited to, the update registration with the
Industrial and Commercial department and other relevant updated
registrations required by other authorities;
and
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6)
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delivery
of the transferred equity shall be
complete.
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The
second installment consists of 36% of the total purchase price and is payable on
completion of the following: Transferors shall have assisted Jiutai to pass a
comprehensive inspection of all of its gas stations and pipe network and to
obtain a passed inspection report issued by the supervisory
department.
The above
conditions shall be satisfied or completed before June12, 2010, otherwise the
Transferee is entitled to terminate this Agreement and the Transferee shall be
indemnified for the damages caused by the Transferors.
Transferors
agreed to separate the surplus land from Jiutai at their own expense, except the
land underlying all of the comprehensive office buildings of Jiutai and the gas
station sites run by Jiutai or assist the Transferee to sign a land lease
agreement with the government. Notwithstanding the foregoing
provision, Transferee agrees to pay the land transfer fees charged by the state
in the course of the separation of the land underlying the gas station sites
required by Jiutai. If the Transferors breaches this obligation,
Transferee is entitled to reduce the purchase price payable by Renminbi 500,000
or to request compensation for breach of this agreement by the
Transferors.
The
Transferors agreed to be responsible for the first two industrial users to
complete and sign the pipeline gas supply agreement in accordance with
requirements of the Transferee on the earlier date of the 90th day of the first
installment payment and the day of the second installment payment. If
the Transferors fail to fulfill the foregoing obligations before the second
installment payment, then the Transferee is entitled to reduce the amount of
500,000 Yuan from the total transfer price or to request Renminbi 500,000 Yuan
as compensation for the breach of the agreement by the Transferors.
Transferors
has agreed to ensure that before the completion of the equity transfer in order
to maintain the stability of the personnel of Jiutai, the hiring new staff,
salary adjustments or other changes shall occur subject to certain permitted
exceptions. Transferors have also agreed that new construction advances shall
not be made subject to certain permitted exceptions. Transferee is entitled to
deduct from the purchase price any losses for any breach these
obligations.
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The
Transferee is entitled to be fully indemnified in the event of fraud or a
material omission by Transferors. A breach of representation or warranty by
either party gives the non breaching party the right to terminate the contract
and sue for compensation.
The third
and final installment is 6% of the purchase price. In order to ensure the smooth
transition of the business and operations of Jiutai the Transferee will keep the
third installment payment as a transfer deposit, which will be paid to the
Transferors within the twelfth month after the completion of delivery of the
transferred equity.
Zhanhua
Jiutai Gas Inc. is primarily engaged in the business of natural gas supply,
construction and development gas pipeline network in urban areas. It
is incorporated June 2007 under PRC Chinese laws.
On April
25, 2007, the company obtained an exclusive right and operating license from the
local government, for the construction and development of a gas pipeline network
and gas supply in the county for 50 years.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this current report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date:
December 17, 2009
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CHINA
NEW ENERGY GROUP COMPANY
(Registrant)
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By:
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/s/ Yangkan
Chong
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Yangkan
Chong
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Chief
Executive Officer
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