- Interim independent investigation
completed. Results favorable: Company
accounted for revenue properly
- Secured new auditor – GHP Horwath; will be
compliant with regulatory filings as soon as possible
- Unaudited revenues of $292
million for the first six months ending June 30, 2011, representing 17% Y-O-Y
growth
- Production and sales volume expected to increase in 2H
2011
- Cash dividend will continue – next
distribution scheduled for July
15th
NINGBO, China, July 11, 2011 /PRNewswire-Asia-FirstCall/ --
Keyuan Petrochemicals, Inc. (Nasdaq: KEYP) ("Keyuan or the
"Company"), a leading merchant manufacturer of various
petrochemical products in China,
announced today that it has received a letter from NASDAQ regarding
a delisting of its stock based on the NASDAQ staff's review of the
Company and pursuant to NASDAQ Listing Rule 5101 and Listing Rule
5250 (c)(1).
The Company has requested a hearing to appeal this decision and
management is working diligently with all relevant authorities to
regain compliance with its regulatory requirements.
Information regarding the Management conference call can be
found below.
Mr. Chungfeng Tao, Chairman and Chief Executive Officer of
Keyuan Petrochemicals, provided an update to shareholders regarding
the Company's operations, investigation and corporate actions:
"We apologize to our shareholders for the challenges we have
experienced over the past few months. While these issues have taken
longer to resolve than we originally anticipated, I assure you that
the entire board of directors and senior management team is
cooperating with all parties, including NASDAQ, to come to an
expeditious resolution. I am especially proud of our employees and
operations managers, who have continued to do an excellent job
running our business throughout this process. I would also like to
thank the Audit Committee and CFO who have stood by us during this
difficult time and worked to complete the investigation and
audit.
"Demand for our products remains strong, and we continue to sign
new customers. I look forward to resolving all pending issues as
soon as possible. In the meantime, we welcome all investors to come
visit our facilities to witness the tremendous progress we are
making," Mr. Tao concluded.
On April 1, 2011, Keyuan filed for
an extension of its 2010 10-K filing with the SEC after issues were
raised by the independent auditor primarily related to certain cash
transactions and recorded sales. The Audit Committee engaged the
services of independent legal counsel, Pillsbury Winthrop Shaw
Pittman LLP ("Pillsbury"), who in turn engaged the services of
Deloitte & Touche LLP ("Deloitte"), a forensic accountant, and
King & Wood, Audit Committee's legal counsel in PRC, to
commence an investigation of the issues raised by the Registrant's
auditors at the time, KPMG. While our new auditors, GHP Horwath,
will commence work immediately we must first complete this
independent investigation being carried out by Pillsbury, Deloitte
and King & Wood before the 2010 audit can be completed.
NASDAQ's notification to delist the Company's stock from the
exchange is based primarily on the Company's inability to file
audited financial statements on a timely basis, as well as issues
raised by KPMG.
The Company has filed a request of an appeal to NASDAQ on the
basis of Management's confidence that we will regain compliance
with all regulatory requirements in a reasonable amount of time. In
the event that the stay to delist is not granted, the Company's
shares will continue to be listed on NASDAQ but trade on the OTC
Pink beginning July 26, 2011 until
the decision of the appeal is released.
Management has fully cooperated with Pillsbury, Deloitte and
King &Wood to provide the information they have requested. The
interim report of the Company's unaudited sales to certain
customers in fiscal year 2010 provided by the investigative team
found that the sales were accounted for appropriately. Once the
full investigation is completed, the Company is confident that it
will be able to regain compliance with the applicable securities
laws.
New Auditor Secured
On July 5, Keyuan engaged GHP
Horwath to be the Company's new auditor. GHP Horwath will begin to
audit the Company's 2010 financial results immediately.
Business Updates
Keyuan continues to operate its business as usual and is
executing the growth plan according to schedule.
- From January 1, 2011 to
June 30, 2011, our unaudited revenue
was $292 million, representing 17%
growth over the same period last year. Market demand for our
products remains strong.
- We completed our capacity expansion on time and on budget in
April, 2011 and now have 720,000 metric tons of annual capacity.
Due to the expanded capacity and strong market demand, we sold
113,971 metric tons (MT) products in the two months of May and
June 2011, representing 4.2% growth
over the same period last year. We expect sales volume to increase
in the second half of the year as our newly expanded facility
continues to ramp up production.
- Our next phase facility expansion is progressing well. The
expansion of the storage facility and the addition of the raw
material pre-treatment facility and asphalt facility are now in the
final stage of approvals by the local authorities. The
Styrene-Butadiene-Styrene ("SBS") production facility is
progressing on schedule.
- Keyuan signed a joint technology development agreement with
Hangzhou Zhongce Rubber Company to develop new commercial
applications for a Solution Polymerization styrene Butadiene Rubber
("SSBR"). SSBR, which is a safer, more environmentally friendly raw
material used primarily in tires, represents a new opportunity in a
fast-growing market.
- We continue to enjoy strong support from the local government
and banks in Ningbo, PRC. Our
strong and growing businesses support the local economy through 437
employees we hired and the $164
million we have invested in infrastructure and land since
breaking ground in 2008. Because we maintain a healthy balance
sheet with no receivables and positive cash flows, the local banks
continue to supply us with working capital loans to support our
business.
Corporate Actions
The Board remains committed to paying a quarterly cash dividend.
The dividend record dates for the distribution of the quarterly
cash dividend of $0.09 per share for
2011 will be the first of March, June, September and December with
payment dates on the fifteenth of April, July, October and January,
or the following business day if the fifteenth of those months fall
on Saturday or Sunday.
Separately, Prax Capital, who invested $20 million in our Company in September 2010, reiterated their commitment to
Keyuan and our management team. "We are as confident as before on
the management and business prospect of Keyuan," said by
Michael Xu, a partner of Prax
Capital, "I believe Keyuan will come out much stronger after the
unfortunate special investigation and deliver fundamental
value."
Mr. Tao concluded "In conclusion, I am deeply humbled by the
collateral damage resulting from our short-term challenges. I want
to personally thank our 437 dedicated employees and our
shareholders for maintaining their trust in our management team
through these difficult times. We are committed to assisting with
the completion of this independent investigation and to regain
reporting and listing compliance. Furthermore, we continue to
grow our business through facility expansions and new customers.
With the tremendous assets we have already built and a clear growth
plan, I am confident we will generate significant shareholder
returns."
CONFERENCE CALL
Management will host a conference call on Wednesday July 13th at 10:00am ET to answer shareholders' questions.
Date:
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Wednesday, July
13th at 10:00 am
ET
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Dial-in:
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877-565-1274 (U.S.);
937-999-3113 (international)
|
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Conference ID:
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82926641
|
|
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The live conference call will also be broadcast live over the
Internet and can be accessed by all interested parties by clicking
on the following link:
http://webcast.mz-ir.com/publico.aspx?codplataforma=2945
A playback will be available two hours after the call's
completion through July 20, 2011. To
listen, please call 1-855-859-2056 within the United States or 1-404-537-3406 when
calling internationally (passcode 82926641).
About Keyuan Petrochemicals, Inc.
Keyuan Petrochemicals, Inc., established in 2007 and operating
through its wholly-owned subsidiary, Keyuan Plastics Co., Ltd., is
located in Ningbo, China and is a
leading independent manufacturer and supplier of various
petrochemical products. Having commenced production in October 2009, Keyuan's operations include an
annual petrochemical manufacturing design capacity of 720,000 MT
for a variety of petrochemical products, with facilities for the
storage and loading of raw materials and finished goods, and a
technology that supports the manufacturing process with low raw
material costs and high utilization and yields. In order to meet
increasing market demand, Keyuan plans to expand its manufacturing
capacity to include a SBS production facility, additional storage
capacity, a raw material pre-treatment facility, and an asphalt
production facility.
Safe Harbor Statement
This press release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can be identified by terminology
such as "will," "expects," "anticipates," "future," "intends,"
"plans," "believes," "estimates" and similar statements. For
example, statements about the future use of the proceeds are
forward looking and subject to risks. Keyuan Petrochemicals, Inc.
may also make written or oral forward-looking statements in its
periodic reports to the U.S. Securities and Exchange Commission on
forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in
press releases and other written materials and in oral statements
made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements
about the Company's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. A number of important factors
could cause actual results to differ materially from those
contained in any forward-looking statement. Potential risks and
uncertainties include, but are not limited to, risks outlined in
the Company's filings with the U.S. Securities and Exchange
Commission, including its registration statement on Form S-1, as
amended. The Company does not undertake any obligation to update
any forward-looking statement, except as required under applicable
law.
For more information, please
contact:
|
|
Investor Relations:
|
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HC International,
Inc.
|
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Ted Haberfield Executive
VP
|
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Tel: +1-760-755-2716
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Email: thaberfield@hcinternational.net
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Website: http://www.hcinternational.net
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Mr. Andrew Haag
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Managing Partner,
USA
|
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Hampton Growth,
LLC
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Tel: +1-877-368-3566
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E-mail:
andrew@hamptongrowth.com
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Website: www.hamptongrowth.com
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SOURCE Keyuan Petrochemicals, Inc.