Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
(Rule
14c-101)
INFORMATION
STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE
ACT OF 1934
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appropriate box:
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Preliminary
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x
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Definitive
Information Statement
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o
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Confidential
for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
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CHINA
NATURAL GAS, INC.
(Name of
Registrant as Specified In Its Charter)
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CHINA
NATURAL GAS, INC.
Tang Yan
Road, Hi-Tech Zone
Xi’an,
710065, Shaanxi Province, China
Telephone
number: 86-29-8832-3325
March 26,
2009
INFORMATION
STATEMENT
Dear
Stockholder:
This
Information Statement (the "Information Statement") is furnished by the Board of
Directors of China Natural Gas, Inc., a Delaware corporation (the "Company", or
"us"), to the stockholders of record of the Company at the close of business on
February 2, 2009 (the "Record Date") to provide information with respect
to certain corporate actions taken by written consent of the holders of a
majority of the outstanding shares of the Company's common stock that were
entitled to vote on such actions (the "Majority Stockholders")
The
written consent, executed by the Majority Stockholders on the Record Date, has
approved an amendment to our Articles of Incorporation to effect a 1 for 2
reverse split of our common stock.
The
Majority Stockholders, holding approximately 52 % of the outstanding shares
of the Company's common stock, has approved, by written consent, all of the
above-described actions. Therefore, all required corporate approvals for these
actions have been obtained. This Information Statement is furnished solely for
the purpose of informing stockholders of these corporate actions in the manner
required by Rule 14c-2 under the Securities Exchange Act of 1934.
WE ARE
NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. THIS IS
NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDER'S MEETING WILL BE
HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
| March 26,
2009 |
By
Order of the Board of Directors,
s/
Qinan Ji
Chief
Executive Officer
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CHINA
NATURAL GAS, INC.
19th
Floor, Building B, Van Metropolis
Tang Yan
Road, Hi-Tech Zone
Xi’an,
710065, Shaanxi Province, China
Telephone
number: 86-29-8832-3325
March 26,
2007
PURPOSE
OF INFORMATION STATEMENT
This
Information Statement (the "Information Statement") is being mailed on or about
March 26, 2009 to the stockholders of record of China Natural Gas, Inc.,
a Delaware corporation (the "Company", or "us"), at the close of business on
February 2, 2009 (the "Record Date"). This Information Statement is being sent
to you for information purposes only. No action is requested on your
part.
This
Information Statement is being furnished by our Board of Directors to provide
stockholders with information concerning an amendment to our Certificate of
Incorporation to effect a 1 for 2 reverse split of the Company's common stock
approved by the holders of a majority of our voting stock (the "Majority
Stockholders"), on the Record Date.
RECORD DATE AND VOTING
SECURITIES
Only
stockholders of record at the close of business on the Record Date were entitled
to notice of the information disclosed in this Information Statement. As of the
Record Date, the Company had one series of common stock, par value $0.0001 per
share, outstanding. On the Record Date, 29,200,304 validly issued shares of our
common stock were issued and outstanding and held of record by approximately
6,073 registered stockholders.
STOCKHOLDERS'
RIGHTS
The
elimination of the need for a special meeting of the stockholders to approve the
actions described in this Information Statement is authorized by Section 228 of
the Delaware General Corporation Law (the "DGCL"). Section 228 provides that any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action which may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the corporation by
delivery to its registered office in this State, its principal place of business
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. In order to eliminate the
costs and management time involved in holding a special meeting and in order to
effect the actions disclosed herein as quickly as possible in order to
accomplish the purposes of the Company, we chose to obtain the written consent
of a majority of the Company's voting power to approve the actions described in
this Information Statement.
The
actions described in this Information Statement cannot be taken until at least
20 days after this Information Statement has first been sent or given to the
Company's stockholders.
DISSENTERS'
RIGHTS
The DGCL
does not provide for dissenters' rights in connection with any of the actions
described in this Information Statement, and we will not provide stockholders
with any such right independently.
EXPENSES
The costs
of preparing, printing and mailing this Information Statement will be borne by
the Company.
STOCKHOLDERS SHARING AN
ADDRESS
We will
deliver only one Information Statement to multiple stockholders sharing an
address unless the Company has received contrary instructions from one or more
of the stockholders. We undertake to deliver promptly, upon written or oral
request, a separate copy of the Information Statement to a stockholder at a
shared address to which a single copy of the Information Statement is delivered.
A stockholder can notify us that the stockholder wishes to receive a separate
copy of the Information Statement by contacting the Company at the address or
phone number set forth above. Conversely, if multiple stockholders sharing an
address receive multiple Information Statements and wish to receive only one,
such stockholders can notify us at the address or phone number set forth
above.
AMENDMENT
TO OUR CERTIFICATE OF INCORPORATION TO EFFECT A
REVERSE
STOCK SPLIT OF OUR COMMON STOCK AT A
RATIO OF
1:2
GENERAL
On
January 15, 2009, our Board of Directors unanimously approved and recommended
that the stockholders approve, and on the Record Date, the Majority Stockholders
approved, an amendment to the Certificate of Incorporation to effect a reverse
stock split of our common stock. The Board of Directors determined that the
reverse stock split will reduce the number of shares of our common stock from
29,200,304 to approximately 14,600,152 shares.
The
reverse stock split, when implemented, will not change the par value of our
common stock. Except for any changes as a result of the treatment of fractional
shares, each stockholder who owns two or more shares will hold the same
percentage of common stock outstanding immediately following the reverse stock
split as such stockholder did immediately prior to the reverse stock
split.
The
reverse stock split is conducted hereafter for the purpose of listing the
Company’s commons tock on the NASDAQ Stock Market in conformance with the
listing requirements.
CONSENT
REQUIRED
Approval
of the amendment required the consent of the holders of a majority of the
outstanding shares of our common stock, as of the Record Date. The Majority
Stockholders, who owned approximately 52% of the outstanding shares of our
common stock as of the Record Date, has given its consent to the amendment, and,
accordingly, the requisite stockholder approval for this action was obtained by
the execution of the Majority Stockholders’ written consent in favor of the
action. We do not intend to seek additional stockholder approval prior to the
effectiveness of this action. This Information Statement is being mailed to you
solely for your information. We are not providing you with a proxy and you are
not requested to send a proxy.
AMENDMENT TO CERTIFICATE
OF
INCORPORATION
Approximately
20 days after this Information Statement has first been sent or given to
stockholders, our Certificate of Incorporation will be amended to effect a 1 for
2 reverse stock split. The Board of Directors of the Corporation may
suspend or withdraw the reverse stock split any time before the reverse stock
split is effective if the Board Directors deems it in the best interests of the
Company and its stockholders to do so.
CERTAIN RISKS ASSOCIATED
WITH THE REVERSE STOCK SPLIT
The
market price per new shares of our common stock after the reverse stock split
(the "New Shares") may not rise or remain constant in proportion to the
reduction in the number of old shares of our common stock outstanding before the
reverse stock split ("Old Shares"). Accordingly, the total market
capitalization of our common stock after the reverse stock split may be lower
than the total market capitalization before the reverse stock split. In the
future, the market price of our common stock following the reverse stock split
may not equal or exceed the market price prior to the reverse stock split. In
many cases, the total market capitalization of a company following a
reverse stock split is lower than the total market capitalization before the
reverse stock split.
PRINCIPAL EFFECTS OF THE
REVERSE STOCK SPLIT
Corporate
Matters.
The
reverse stock split will be effected simultaneously for all of our common stock
and the exchange ratio will be the same for all of our common stock. The
reverse stock split will affect all of our common stockholders uniformly and
will not affect any stockholder's percentage ownership interests in the Company
or proportionate voting power, except to the extent that the reverse stock split
results in any stockholders owning a fractional share. See "Fractional
Shares" below.
The
reverse stock split will affect all stockholders uniformly and will not affect
materially such stockholders' percentage ownership interests in the company.
Common stock issued pursuant to the reverse stock split will remain fully paid
and non-assessable. Following the reverse stock split, we will continue to be
subject to the periodic reporting requirements of the Securities Exchange Act of
1934, as amended.
Fractional
Shares.
No scrip
or fractional certificates will be issued in connection with the reverse stock
split. Instead, any fractional share that results from the reverse stock split
will be rounded up to the next whole share. This is being done to avoid
the expense and inconvenience of issuing and transferring fractional shares of
our common stock as a result of the reverse stock split.
Authorized
Shares.
As of the
Record Date, we had 45,000,000 shares of common stock authorized and 29,200,304
shares of common stock outstanding. Although the number of shares of common
stock we are authorized to issue will not change as a result of the reverse
stock split, the number of shares of our common stock issued and outstanding
will be reduced to a number that will be approximately equal to the number of
shares of common stock issued and outstanding immediately prior to the
effectiveness of the reverse stock split divided by 2. Authorized but
unissued shares will be available for issuance, and we may issue such shares in
financings or otherwise. If we issue additional shares, the ownership interest
of holders of common stock may also be diluted.
Accounting
Matters.
The
reverse stock split will not affect the par value of our common stock. As a
result, as of the effective time of the reverse stock split, the stated capital
on our balance sheet attributable to our common stock will be reduced
proportionately based on the reverse stock split ratio and the additional
paid-in capital account will be credited with the amount by which the stated
capital is reduced. The per share net income or loss and net book value of
our common stock will be restated because there will be fewer shares of our
common stock outstanding.
Potential
Anti-Takeover Effect.
Although,
the increased proportion of unissued authorized shares to issued shares could,
under certain circumstances, have an anti-takeover effect (for example, by
permitting issuances that would dilute the stock ownership of a person seeking
to effect a change in the composition of our Board of Directors or contemplating
a tender offer or other transaction for the combination of us with another
company), the reverse stock split is not a response to any effort of which we
are aware to accumulate our shares of common stock or obtain control of the
Company, nor is it part of a plan by our management to recommend a series of
similar amendments to our Board of Directors and stockholders.
PROCEDURE FOR EFFECTING
REVERSE STOCK SPLIT AND EXCHANGE OF STOCK CERTIFICATES
Approximately
20 days after this Information Statement has first been sent or given to
stockholders, we will file an amendment to our Certificate of Incorporation in
the form approved by our Majority Stockholders with the Secretary of State of
the State of Delaware. The reverse stock split will become effective
upon the filing of our Amended Certificate of Incorporation with the State of
Delaware, which is referred to below as the "effective time." The
Board of Directors may suspend or withdraw the reverse stock split any time
before the effective time if the Board of Directors deems it in the best
interests of the Company and its stockholders to do so.
Beginning
at the effective time, each certificate representing Old Shares will be deemed
for all corporate purposes to evidence ownership of New Shares. Our
transfer agent, Interwest Transfer, Inc. located at 1981 Murray Holladay
Road, Suite 100 Salt Lake City, UT 84117. Their telephone number is (801)
272-9294, is acting as exchange agent for purposes of implementing the exchange
of stock certificates. Holders of Old Shares may surrender certificates
representing Old Shares for certificates representing New Shares. No new
certificates will be issued to a stockholder until such stockholder has
surrendered such stockholder's outstanding certificate(s) to the exchange agent.
The Company will be responsible for the payment of all fees, including the
transfer agent's fee, associated with certificate exchange and
delivery.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S).
FEDERAL INCOME TAX
CONSEQUENCES OF THE REVERSE STOCK SPLIT
EACH
STOCKHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL
OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK
SPLIT.
STOCK
OWNERSHIP
The
following table sets forth information as of the Record Date, regarding the
beneficial ownership of our common stock (i) by each person or group known by
our management to own more than 5% of the outstanding shares of our common
stock, (ii) by each director, the chief executive officer and our other
executive officers, and (iii) by all directors and executive officers as a
group. Unless otherwise noted, each person has sole voting and investment power
over the shares indicated below, subject to applicable community property
laws.
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Shares
Beneficially Owned
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Name
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Before
Stock Split(Shares)
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After
Stock Split(Shares)
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Before
Stock Split(Percentage)(1)
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After
Stock Split (Percentage)(2)
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Executive
Officers and Directors
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Qinan
Ji, CEO and Chairman
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5,931,596 |
(3) |
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2,965,798 |
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20.30 |
% |
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20.30 |
% |
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Richard
Wu, CFO
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— |
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— |
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— |
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— |
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Zhiqiang
Wang, Director
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— |
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— |
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— |
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— |
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Lawrence
W. Leighton, Director
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— |
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— |
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— |
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— |
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Carl
Yeung, Director
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— |
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— |
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— |
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— |
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Xiangdong
Yang, Director
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— |
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— |
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— |
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— |
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Directors
and executive officers
as
a group ( 6 persons)
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5,931,596 |
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2,965,798 |
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20.30 |
% |
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20.30 |
% |
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Xiang
Ji(3)
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1,456,232 |
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728,116 |
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5.00 |
% |
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5.00 |
% |
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Robert
Moses(4)
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2,000,000 |
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1,000,000 |
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6.90 |
% |
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6.90 |
% |
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Heartland
Value Fund(5)
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1,725,000 |
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862,500 |
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5.90 |
% |
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5.90 |
% |
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Xi’an
Sunway Technology & Industry Co., Ltd(6)
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2,875,364 |
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1,437,682 |
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9.80 |
% |
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9.80 |
% |
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Yangling
Bodisen Biotech Development Co, Ltd.(7)
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2,063,768 |
(4) |
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1,031,884 |
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7.10 |
% |
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7.10 |
% |
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Abax
Lotus, Ltd. (8)
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2,900,000 |
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1,450,000 |
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9.03 |
% |
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9.03 |
% |
(1) In
determining the percent of voting stock owned by a person before the reverse
stock split, (a) the numerator is the number of shares of common stock
beneficially owned by the person, and (b) the denominator is the total of
the 29,200,304 shares of common stock outstanding on the Record
Date.
(2) In
determining the percent of voting stock owned by a person after the reverse
stock split (a) the numerator is the number of shares of common stock
beneficially owned by the person immediately after the reverse stock split, and
(b) the denominator is the total of the approximately 14,600,152 shares of
common stock that will be outstanding after the reverse stock
split.
(3) Mr.
Xiang Ji is the son of Mr. Qinan Ji, Chairman and CEO of the
Company.
(4) As
set forth in the Schedule 13G filed with the SEC on September 7,
2007.
(5)
William J. Nasgovitz has shared voting and dispositive power with respect to
such shares as reported in the Schedule 13G filed with the SEC on February 8,
2008.
(7) As
set forth in the Schedule 13D filed with the SEC on December 23,
2005. The shares owned by Yangling Bodisen Biotech Development Co.,
Ltd. (“Yangling”) are subject to a dispute between Yangling and Xiang
Ji.
(8) As
set forth in Schedule 13D filed with the SEC on February 6, 2008. Abax Lotus
Ltd. holds 2,900,000 of the Company’s warrants to purchase the common stock of
the Company and the percentage ownership is calculated based on the Company’s
29,200,304 shares of common stock outstanding plus the number of warrants
outstanding as of the Record Date.
ADDITIONAL
AVAILABLE INFORMATION
We are
subject to the information and reporting requirements of the Securities Exchange
Act of 1934 and in accordance with such act we file periodic reports, documents
and other information with the Securities and Exchange Commission relating to
our business, financial statements and other matters. Such reports and other
information may be inspected and are available for copying at the offices of the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 or may be accessed at www.sec.gov.