Monday, ShengdaTech, Inc. (SDTH), a manufacturer of nano precipitated calcium carbonate and coal-based chemical products, said it expects to close the acquisition of Jinan Fertilizer Co., Ltd. prior to the local government's mandated closing of its chemical facility in Tai'an City on October 31, 2008. The Xinhua, China-based company also plans relocate its chemical facility upon closing Jinan's buyout.
ShengdaTech noted that its affiliate, Shandong Shengda Technology Co., Ltd., is in talks with the Jinan City government on the final terms of the buyout.
Xiangzhi Chen, the president and chief executive officer of ShengdaTech stated, "In the unlikely event that the acquisition is not completed by the relocation deadline, we plan to continue production by renting production facilities from Jinan Fertilizer and its subsidiaries."
ShengdaTech at its annual shareholders' meeting had said that it is reasonably confident it would receive an extension from the local government to continue operating its chemical facility beyond October 31. But, mining accidents and food safety issues in China have induced the government to be more stringent with environmental restrictions and workplace safety standards.
Therefore, ShengdaTech no longer believes it will receive an extension and that it will be required to cease operations at the facility on November 1, 2008, as previously announced.
The company said its Tai'an facility is not in violation of any safety regulations, but was located in close proximity to residential and non-manufacturing business properties.
SDTH is currently trading down 8 cents at $7.21.
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