EMAIL DETAILS

Gentlemen
The SINOPEC IPO is being pushed back take a look at the article below. We
need a call with our BHR executive team so we can get everyone on the same
page and more importantly we need to understand where BHR is In our
negotiations with SINOPEC
In light of the fact the US roadshow will happen soon and the Eruopean
roadshow is ongoing this week I think it is critical that the messaging be
closely co-ordinated

Jimmy
---------- Forwarded message ----------
From: *Eileen Kerwin* <agkerwin@gmail.com>
Date: Thursday, May 7, 2015
Subject: Sinopec
To: James Bulger <jbulger@thorntonai.com>


Sinopec Gas-Station IPO Loses MomentumRetirement of oil company’s chairman
means deal won’t happen this year
[image: Fu Chengyu, Sinopec’s chairman, is retiring.]ENLARGE
Fu Chengyu, Sinopec’s chairman, is retiring. PHOTO: ALEX HOFFORD/EUROPEAN
PRESSPHOTO AGENCY
By
YVONNE LEE And

PRUDENCE HO
May 6, 2015 3:38 p.m. ET
0 COMMENTS
<http://www.wsj.com/articles/sinopec-gas-station-ipo-loses-momentum-1430941083?tesla=y#livefyre-comment>

Even before this week, plans for a multibillion-dollar IPO of a vast chain
of gas stations owned by China’s Sinopec had only been grinding slowly
ahead. Now, the deal is unlikely to happen at all this year, following the
retirement of Fu Chengyu <http://topics.wsj.com/person/F/Fu-Chengyu/6765>, the
firm’s high-profile chairman.

A keen proponent of oil-industry deals, Mr. Fu, who retired on Monday, was
the driver behind the plan by Beijing-based China Petroleum & Chemical
<http://quotes.wsj.com/CN/XSHG/600028> Corp.
<http://quotes.wsj.com/CN/XSHG/600028>, known as Sinopec, to list the
business, Sinopec Marketing Co., in a Hong Kong offering that had been
expected to raise between $5 billion and $10 billion.

People with knowledge of the matter say the IPO, which could have been the
biggest in Asia this year after the Japanese government’s pending listing
of its post-office operations, isn’t likely to take place until 2016 at the
earliest.

If it ultimately takes place, a listing would achieve two goals for
Beijing. It would raise cash that Sinopec could use to make the shops
attached to its gas stations more lucrative. And it would bring in foreign
investors who could press for change within Sinopec Marketing, helping the
government with a broader effort to overhaul large, bureaucratic,
state-owned firms.

Investment bankers hoping for roles in the offering had been expecting to
be called in to make pitches for the work after the Lunar New Year holidays
ended in late February. They continue to wait.
ENLARGE

Meanwhile, the oil industry is facing challenges on multiple fronts. Growth
in oil demand has become weaker as China’s economic expansion slows.
Companies are under government pressure to instill financial discipline
because the past year’s plunge in oil prices has made many of the
acquisitions China has made overseas in recent years look overpriced.
Advertisement

And Beijing has been cracking down
<http://www.wsj.com/articles/chinas-antigraft-authority-takes-aim-at-sinopec-1430150045>
on
alleged corruption at state-owned enterprises. The government said last
month that it was investigating Wang Tianpu
<http://topics.wsj.com/person/W/Wang-Tianpu/6478>, Sinopec’s president, for
“serious violations of discipline and law.” Mr. Wang has resigned all his
positions at Sinopec, according to the company. He hasn’t been available to
comment.

The former head of China National Petroleum Corp., Jiang Jiemin
<http://topics.wsj.com/person/J/Jiang-Jiemin/883>,stood trial on charges of
corruption and abuse of power in April. A court in China’s central city of
Hanjiang said Mr. Jiang admitted his guilt at trial.

Bankers say that due to both the crude-price collapse and increased
government scrutiny, oil companies have been proceeding more slowly than
usual in making deals.

Still, some progress has been made in Sinopec Marketing’s plan to go
public. A first step, the sale of around 30% of the business that began
late last year, closed two months ago. Contrary to what many investors had
expected given the focus on overhauling state-owned companies by bringing
in expertise from abroad, most of the 25 groups of buyers that acquired
stakes in the operation were domestic funds.

Making state businesses more efficient remains a crucial plank of Beijing’s
strategy, so Sinopec Marketing’s float will likely stay on the agenda, say
people with knowledge of the matter.

“The board of directors of Sinopec Marketing will decide the future
development of the company in response to the business environment,” a
Sinopec spokeswoman said in an emailed statement Wednesday. She said the
company has had no recent discussions on when to select bankers to handle
the IPO.

In March, Mr. Fu told reporters in Hong Kong that Sinopec hadn’t decided on
when to float Sinopec Marketing, but that a Hong Kong listing remained the
plan.

Mr. Fu, 63 years old, gained fame globally in 2005. He was at the helm of
Cnooc <http://quotes.wsj.com/HK/XHKG/0883> Ltd.
<http://quotes.wsj.com/HK/XHKG/0883>, a Sinopec rival, when the firm made
an unsuccessful $18.5 billion bid for California’s Unocal Corp. Mr. Fu
became Sinopec’s chairman in April 2011.

Under Mr. Fu’s leadership, Sinopec bought several oil firms overseas,
including Daylight Energy Ltd., a Canadian oil and gas explorer. Sinopec
also listed its engineering and construction operations in Hong Kong,
raising almost $2 billion in total.

Sinopec said Monday that Mr. Fu was stepping down because he had reached
retirement age. The company said that Wang Yupu, 59, former vice governor
of Heilongjiang province, in the northeast, had been appointed to succeed
him.

“Mr. Fu was the key person pushing the IPO plan of listing,” said a banker
who is closely monitoring the potential deal. “We don’t know what the new
management thinks.”

A public offering would have plenty of fans, say fund managers.

Sinopec Marketing’s 30,000 gas stations, 23,000 of which have convenience
stores attached to them, are dotted across the east and south of the
country. They account for 60% of China’s market for oil products for cars;
revenue exceeds that from the 20,000 gas stations owned by CNPC, which
dominate the north.

“Investors are looking forward to the offering,” said Matthew Kwok,chief
strategist at Hong Kong-based China Yinsheng Asset Management Ltd. “The key
that investors would pay attention to is whether the efficiency of its
convenience-store operation can be enhanced after introducing strategic
investors.”

The most recent figures available, dating to 2013, show that nonfuel sales
accounted for less than 1% of profit at the gas-station business, Mr. Fu
said last year. The comparable figure in the West is around 50%, according
to a 2014 Morgan Stanley report.

Write to Yvonne Lee at yvonne.lee@wsj.com
<javascript:_e(%7B%7D,'cvml','yvonne.lee@wsj.com');> and Prudence Ho at
prudence.ho@wsj.com <javascript:_e(%7B%7D,'cvml','prudence.ho@wsj.com');>


--
James J. Bulger
Chairman
Thornton Group LLC
14 Beacon Street, Suite 804A
Boston, MA 02108
Office tel: 617.248.944