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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
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For April 26, 1999
CHINA ENERGY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
CITCO BUILDING, WICKHAMS CAY 971-B RUSSELL AVENUE
P.O. BOX 662, ROAD TOWN RUSSELL OFFICE PARK
TORTOLA, BRITISH VIRGIN ISLANDS GAITHERSBURG, MARYLAND 20879
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (301) 670-5595
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F __X__ Form 40-F _____
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is thereby furnishing the information
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ____ No __X__
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b). Not Applicable.
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<PAGE>
CHINA ENERGY RESOURCES CORPORATION ANNOUNCES
1998 PRELIMINARY UNAUDITED RESULTS
INCREASES LINE OF CREDIT FROM AMERICA ORIENT GROUP
APPOINTS GUOLIANG GUAN AS DIRECTOR
GAITHERSBURG, Md.--April 26, 1999-- China Energy Resources Corporation (the
"Company") (ASE: CHG) today announced preliminary unaudited results of
operations for the fiscal year ended December 31, 1998, an increase in its line
of credit by $1,000,000 from America Orient Group, Inc. ("AOG"), and the
appointment of Guoliang Guan, Director and Senior Vice President of AOG, as a
member of the Board of Directors of the Company.
Regarding the Company's results of operations, the Company continued to
experience difficulties resulting from a lack of financial and managerial
resources and a weakening in organizational control in the fiscal year ended
December 31, 1998. On December 3, 1998, the Company entered into a definitive
stock and warrant purchase agreement (the "Stock Purchase Agreement") with AOG,
in which the Company agreed to sell to AOG 5,000,000 shares of the common stock
of the Company, par value $0.01 per share (the "Common Stock"), and a warrant to
purchase 5,000,000 shares of Common Stock for US$1,000,000. The closing of the
Stock Purchase Agreement is contingent, among other things, upon: (i) the
satisfactory completion of the due diligence process by AOG; (ii) the
satisfactory completion of the outstanding negotiations between AOG and the
Company's convertible note holders who participated in the Company's financings
in 1996/1997 regarding several adjustments to the terms of such convertible
notes; and (iii) the approval of the Company's stockholders at the forthcoming
Annual Meeting. The Annual Meeting will be scheduled as soon as practical after
the SEC completes its review of the proxy statement.
On March 3, 1999, the Company assigned management responsibilities to AOG and
has since drawn down approximately $200,000 in loan proceeds from AOG under a
convertible note of $24,160 and a revolving convertible note of up to $250,000
(the "Revolving Note"), for working capital purposes. Both notes have an 8% per
annum interest rate, and have the same conversion mechanisms which provide for
AOG to convert any outstanding principal amount or accrued interest into shares
of Common Stock at $0.20 per share.
On March 24, 1999, the Company, together with Mishan Hua Xing Coal Limited
("MHXC"), a joint venture company in China in which the Company owns an 80%
interest, entered into a definitive loan and guarantee agreement (the "Loan
Agreement") with the Orient Finance Company ("OFC") for a $2,000,000 term loan
of three years with a one-year grace period and a 6.625% interest rate per
annum. The Loan Agreement provides no conversion features. OFC is a subsidiary
of the China Orient Group Industries, Inc. and an affiliate of AOG. The Loan
Agreement will become effective upon the closing of the Stock Purchase
Agreement. The loan proceeds will be primarily used in connection with the debt
rescheduling and restructuring efforts by MHXC with regard to certain debts from
local banks in China, and to provide working capital to re-start the coal wash
operations in the Mishan City Coke Factory, one of the MHXC's factories.
The Company's preliminary unaudited consolidated statements of operations and
balance sheets are provided below. The completion of the 1998 financial
statements and the report of the independent auditors thereon
<PAGE>
is subject to the closing of the Stock Purchase Agreement and the provision of
the finance under the Loan Agreement.
<TABLE>
<CAPTION>
CHINA ENERGY RESOURCES CORPORATION PRELIMINARY UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Net sales....................................................... $6,660 $9,053
Subcontracting income........................................... - 362
Cost of sales................................................... (4,835) (5,516)
------ ------
Gross profit.................................................... 1,825 3,899
Selling, general and administrative expenses.................... (2,634) (4,921)
Write-off of advances to related parties........................ - (1,768)
- ------
Operating (loss) income......................................... (809) (2,790)
Interest expense................................................ (1,339) (1,056)
Other (expense) income.......................................... (79) (190)
--- ----
(Loss) income before minority interests......................... (2,227) (4,036)
Minority interest............................................... 196 494
--- ---
Net (loss) income............................................... $(2,031) $(3,542)
------- -------
(Loss) earnings per share
- Basic....................................................... $(0.63) $(1.18)
------ ------
- Fully-diluted............................................... $(0.63) $(1.18)
------ ------
Weighted average number of shares outstanding
- Basic....................................................... 3,248 2,994
----- -----
- Fully-diluted............................................... 3,248 2,994
----- -----
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
CHINA ENERGY RESOURCES CORPORATION
PRELIMINARY UNAUDITED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
DECEMBER 31,
------------
1998 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................ $ 82 $ 767
Accounts receivable, net of allowance for doubtful accounts
of $1,571 (1997: $1,576).............................................. 1,472 2,346
Prepayments, prepaid expenses, and other assets.......................... 1,222 1,615
Inventories.............................................................. 3,020 4,136
----- -----
Total current assets................................... 5,796 8,864
Property, plant and equipment, net....................................... 17,916 18,002
Value added taxes receivable............................................. 81 140
Other assets............................................................. 284 387
--- ---
Total assets........................................... $24,077 $27,393
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Short-term borrowings.................................................... $4,625 $5,057
Current portion of long-term debt........................................ 1,812 1,812
Accounts payable......................................................... 796 1,629
Customer deposits........................................................ 225 87
Other payables........................................................... 2,078 2,392
Plant construction payables.............................................. 7 77
Accrued payroll and employee benefits.................................... 385 474
Accrued interest......................................................... 2,495 1,596
Other accrued liabilities................................................ 367 187
--- ---
Total current liabilities.............................. 12,790 13,311
Long-term debt
Related parties.......................................................... 2,800 2,414
Convertible notes........................................................ 2,548 2,347
Minority interests....................................................... 1,543 1,739
Commitments and contingencies
Stockholders' equity:
Preferred shares, $0.01 par value, 2,000,000 shares authorized,
No shares issued and outstanding......................................... - -
Common stock, $0.01 par value, 50,000,000 shares authorized,
3,248,494 (1997: 3,248,494) shares issued and outstanding................ 32 32
Additional paid-in capital............................................... 11,770 11,762
Deficit.................................................................. (3,971) (1,940)
Advances receivable from related parties................................. (3,435) (2,272)
------ ------
Total stockholders' equity............................. 4,396 7,582
----- -----
Total liabilities and stockholders' equity............. $24,077 $27,393
------- -------
</TABLE>
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<PAGE>
AOG has agreed to increase the line of credit under the Revolving Note by
$1,000,000, to enable the Company to, among other things, restructure the
Company's debt with local banks in China and re-start the coal wash operations
under MHXC.
The Board of Directors of the Company has appointed Guoliang Guan as a Director.
Mr. Guan is a Director and Senior Vice President of AOG, positions he has held
since 1994. Mr. Guan, a CPA in China, has also been a Director and Vice
President of China Orient Group Industries, Inc. ("COG"), AOG's parent company
in China, since 1992. Other positions presently held by Mr. Guan include:
Executive Director of the Board of Directors and General Manger of the Orient
Group Co. Ltd., a partially owned subsidiary of COG listed on the Shanghai Stock
Exchange; Chairman of the Board of Directors of the New China Life Insurance Co.
Ltd., a partially owned insurance company of COG with operations in China;
Chairman of the Board of Directors of the OFC, a wholly owned finance company of
COG; and a member of the Board of Directors of the Jinzhou Harbor (Group) Co.
Ltd., a partially owned subsidiary of COG listed on the Shanghai Stock Exchange.
With Guoliang Guan's appointment, the Company's Board will now have five
members.
The Company is a holding company which is the sole shareholder in China Coal
Mining (B.V.I.) Co. Ltd., a coal refining company located in the People's
Republic of China.
The Statements in this press release that are not historical facts constitute
"forward-looking statements" that involve risks, uncertainties and other facts
which may cause results to be materially different from those set forth in the
forward-looking statements. Such factors include but are not limited to, the
following general economic and business conditions; competition; the ability to
implement and the effectiveness of business strategy and development plans;
quality of management; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs; and
availability and cost of raw materials and supplies. China Energy Resources
Corporation will not undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events. Parties receiving this release are encouraged to review all filings made
by the Company with the Securities and Exchange Commission.
Contact:
China Energy Resources Corp.
Bill H. Zhao, Chairman of the Board
(301) 670-5595 or (301) 670-5596(fax)
or
The Equity Group Inc.
Investor Relations Counsel:
Loren Goldstein (212) 836-9604
[email protected]
Linda Latman (212) 836-9609
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHINA ENERGY RESOURCES CORPORATION
By: /s/ Bill H. Zhao
----------------------------------
Bill H. Zhao
President, Chief Executive Officer
and Chairman of the Board
Date: April 30, 1999
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