Synthesis Energy Systems Announces Equity Investments Totaling $15.5 Million
Strategic Cooperation with Hongye International Investment Group Co., Ltd.
Houston, Texas June 18, 2012 Synthesis Energy Systems, Inc. (NASDAQ: SYMX) (SES) today announced that it has signed
agreements with Hongye International Investment Group Co., Ltd. (Hongye) and Shanghai Zhongmo Investment Management Co., Ltd. (Zhongmo) for a total investment of approximately US$15.5 million in newly issued shares of SES
common stock to support the Companys SES China business.
Under the terms of the agreement, Hongye will receive 6,175,093 newly issued
shares of common stock of SES at closing, representing an approximately 9.9% interest in SES, and Zhongmo will receive 4,177,335 newly issued shares of common stock, representing an approximately 6.7% ownership interest in SES. Hongye and Zhongmo
will invest in SES through Qualified Domestic Institutional Investors (QDII) approved by Chinas Securities Regulatory Commission. The purchase price per share is $1.50 and the transactions are scheduled to close by the end of July 2012. SES
will increase the size of its Board of Directors from six members to eight, with two individuals to be appointed by Hongye, including Mr. Feng Gao, Hongyes Chairman.
Hongye has a strong presence in the coal industry in Inner Mongolia and is looking to expand its coal to chemicals business there and elsewhere in China. This investment, in combination with SES
unique coal gasification technology, provides SES and Hongye the ability to develop additional projects in China. Potential cooperation includes the expansion of SES Zao Zhuang Joint Venture project to produce glycol, the repurposing of
SES Golden Concord project in Inner Mongolia to glycol, and Hongyes current coal to chemicals project under development in Wuhai, Inner Mongolia. Glycol produced from coal is of strategic interest to Hongye, and SES technology can
provide the low cost, efficient means to grow such a business.
These agreements are an important step in advancing our current and
future operations in China, stated Colin S. Tam, Managing Director of SES China. We are pleased that Hongye and Zhongmo have agreed to invest in SES, which we view as a further validation of the potential of our technology to unlock the
value of low quality, low cost coals in China. We believe that our gasification technology represents a significant opportunity for Hongye and others to develop their coal to chemicals business and to add value to their coal mining operations in
Inner Mongolia and other regions with abundant low quality and low cost coals. Chairman Gaos track record in China business is impressive and we believe his entrepreneurial spirit and visionary leadership will accelerate the progress of SES in
Robert Rigdon, President and CEO of SES, said, With these investments from Hongye and Zhongmo, timed with the pending
startup of our Yima Joint Venture project this summer, we believe that our SES China business is well positioned for near term growth. This important strategic and financial accomplishment in China is indicative of the increasing interest we are
seeing in our ability to add value to our partners and customers businesses. SES is advancing additional similar initiatives outside of China around specific key business verticals such as transportation fuels, steel manufacturing, small
scale power, and renewables.
Chairman Gao of Hongye, said, SES advanced coal gasification technology is strategically
important and uniquely well suited to very low quality coals such as those in Inner Mongolia. We believe it offers great promise to developing Chinas future coal to chemicals and energy industries, and to advancing our growth plans in Inner
Mongolia. We look forward to a strong and growing partnership with SES and SES China.
Crystal Vision Energy acted as management
advisors to SES, Roth Capital Partners acted as financial advisors and King & Wood Mallesons (PRC) and Porter Hedges LLP acted as legal advisors to SES.
About Synthesis Energy Systems, Inc.
SES provides technology,
equipment and engineering services for the conversion of low rank, low cost coal and biomass feedstocks into energy and chemical products. Its strategy is to create value through providing technology and equipment in regions where low rank coals and
biomass feedstocks can be profitably converted into high value products through its proprietary U-GAS® fluidized
bed gasification technology, which SES licenses from the Gas Technology Institute. U-GAS® gasifies coal cost
effectively, without many of the harmful emissions normally associated with coal combustion plants. The primary advantages of
U-GAS® relative to other gasification technologies are (a) greater fuel flexibility provided by the ability
of SES to use all ranks of coal (including low rank, high ash and high moisture coals, which are significantly cheaper than higher grade coals), many coal waste products and biomass feed stocks; and (b) the ability of SES to operate efficiently
on a smaller scale, which enables the construction of plants more quickly, at a lower capital cost, and, in many cases, in closer proximity to coal sources. SES currently has offices in Houston, Texas, and Shanghai, China. For more information on
SES and SRS, visit www.synthesisenergy.com or call (713) 579-0600.
Hongye is a diversified group and is one of the top 100 private enterprises in Inner Mongolia. Hongye operates in three major business areasenergy
and natural resources, finance and bio-pharmaceuticals. The major coal mine resources of Hongye are located in Wuhai City of Inner Mongolia.
Zhongmo is a private
company principally engaged in providing financial and management consulting and advisory services. Zhongmo specializes in providing consulting services to Chinese enterprises looking for investment and financing solutions domestically as well as
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SES Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from
those projected. Among those risks, trends and uncertainties are the early stage of development of SES, its estimate of the sufficiency of existing capital sources, its ability to successfully develop its licensing business, its ability to raise
additional capital to fund cash requirements for future investments and operations including its China platform initiative, its ability to reduce operating costs, the limited history and viability of its technology, commodity prices and the
availability and terms of financing opportunities, its results of operations in foreign countries, its ability to diversify, its ability to complete the restructuring of the ZZ Joint Venture, its ability to obtain the necessary approvals and permits
for its future projects, the estimated timetables for achieving mechanical completion and commencing commercial operations for the Yima project as well as the ability of the Yima project to produce revenues and earnings, the sufficiency of internal
controls and procedures and the ability of SES to effect the transactions with Hongye and Zhongmo, grow its business and generate revenues and earnings as a result of its proposed China and India platform initiatives, as well as its joint venture
with Midas Resource Partners. Although SES believes that in making such forward-looking statements its expectations are based upon reasonable assumptions, such statements may be influenced by factors that could cause actual outcomes and results to
be materially different from those projected. SES cannot assure you that the assumptions upon which these statements are based will prove to have been correct.
Important Notice from SES
In connection with the proposed ZJX/China Energy transaction,
SES has filed a preliminary proxy statement, and intends to file a definitive proxy statement, with the SEC and intends to mail the definitive proxy statement to the stockholders of SES. SES and its directors and officers may be deemed to be
participants in the solicitation of proxies from the stockholders of SES in connection with the transaction. Information about the transaction is set forth in the preliminary proxy statement filed, and will be set forth in the definitive proxy
statement to be filed by SES with the SEC.
You may obtain the preliminary statement and, when available, the definitive proxy statement, for
free by visiting EDGAR on the SEC website at www.sec.gov. Investors should read the definitive proxy statement carefully before making any voting or investment decision because that document will contain important information.
|Synthesis Energy Systems, Inc.
||MBS Value Partners, LLC|
||Matthew D. Haines|
|Chief Accounting Officer
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