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Sinoenergy Corp. (Nasdaq: SNEN) Buzz Stock of the Day


Shares of Chinese natural gas developer Sinoenergy Corporation (Nasdaq: SNEN) rose 53 cents, or 41.5 percent, to $1.81 in morning trading Monday after the company announced that it will be taken private through a merger with Skywide Capital Management Ltd.

Skywide, which is owned by Sinoenergy chairman, Tianzhou Deng, and its president, Bo Huang, is Sinoenergy’s largest shareholder, holding 39.06 percent of the company’s outstanding common stock.

Shareholders of Sinoenergy will receive $1.90 per-share when the merger is completed. That amounts to a total value of about $30.3 million, a 48.4 percent premium over Sinoenergy's closing price of $1.28 per share on Friday.

Sinoenergy’s board of directors approved the merger upon the recommendation of a special committee of the board consisting solely of independent directors. Brean Murray, Carret & Co. served as financial advisor to the Company in this transaction and rendered a fairness opinion to the special committee with respect to the transaction.

The deal is subject to the approval of majority shareholders and customary closing conditions.
The merger comes after a tumultuous year for Sinoenergy, which recorded a total loss for the second quarter of more than $2 million. The loss was due in part to an operating loss of $1 million and more than $1.1 million in losses from unpaid rent from lessee Qingdao Mingcheng Real Estate, Co., which leased a downtown facility from Sinoenergy for a three year term at RMB 40 million per-year. Sinoenergy had received only one payment of RMB 10 million from Qingdao Mincheng.
“We understand that there are serious problems with Mingcheng's operations and investments in the current tough real estate market,” said Sinoenergy CEO Bo Huang in March.
"While we are striving to improve our operations, and hoping for an upturn after the challenging second quarter, but as the Mingcheng case illustrates, the Company is subject to domestic and even global economic conditions that are beyond our control."