BEIJING,
July 25, 2018 /PRNewswire/ --
Origin Agritech Ltd. (NASDAQ: SEED) ("the Company" or
"Origin") an agricultural biotechnology trait and corn seed
provider, today announced that the Company received the asset sale
proceeds of RMB 24.14 million from
the first closing of the asset sale transaction (First Closing)
from Beijing Shihui Agricultural Development Co., Limited (Beijing
Shihui or the Buyer), with this payment, the first phase of sale is
completed. The Company will work with Beijing Shihui to cancel the
second phase for the sale of its commercial seed
business.
Origin and its subsidiaries entered a Master Transaction
Agreement with Beijing Shihui on September
26, 2016, to sell portions of its commercial seed business.
Under the agreement, the sale was to be in two separate phases. The
first part of the transaction (First Closing) called for the sale
of the assets under the subsidiaries Denong Zhengcheng Seed Limited
(Denong), Changchun Origin Seed Technology Development Limited
(Changchun Origin), and Linze Origin Seed Limited (Linze Origin)
for an aggregate purchase price of RMB200
million (including debt assumption), which was later
modified to RMB221 million. The
second phase of the transaction (Second Closing) was to include the
assets under the newly created entity Zhengzhou Origin including a
seed processing plant in Zhengzhou,
China, the seed distribution business of Beijing Origin Seed
Limited (Beijing Origin), and the Company headquarters building in
Beijing. The Second Closing called
for the Buyer to deliver to the Company an aggregate of
RMB190 million (including debt
assumption). The Buyer prepaid RMB10
million of the consideration to the Company at the signing
of the Master Agreement.
With the current payment of RMB24.14 million from the Buyer, the First
Closing now is completed. The Company has reviewed the Second
Closing and believes that it is in the best interest of the
Company, at this time, to cancel the Second Closing. With the
cancellation of the Second Closing, the Company will continue to
own the seed processing plant in Zhengzhou, the distribution business of
Beijing Origin and the Beijing
headquarters building. The distribution business of Beijing Origin
represented over 70% of total corn seed revenue during 2017
planting season.
The Company believes that the assets to be retained are
more valuable to the Company at this time partly because they can
generate significant cash flow and potentially can result in
meaningful earnings for the Company. More importantly, the Company
believes that the potential for the GMO technologies to be
commercialized in China has
increased recently. If the GMO technologies can be commercialized
by 2020, as suggested by an announced plan from the Chinese
government, the combined assets of the Company's GMO technologies
and distribution business could prove of significant value to the
shareholders.
"At this point, it's important for us to focus on the new
strategic directions we have announced previously and pursue
cancellation of the Second Closing so that the Company is able to
move ahead with its plans," commented Dr. James Chen, Chief Executive Officer of
Origin. Dr. Chen stated further, "the increasingly positive
attitude from the Chinese government toward corn seed GMO
technologies could allow us to realize a better value if we keep
portions of our Chinese commercial corn seed business."
The value of GMO technologies is beginning to be
recognized by the Chinese government and public, especially after
the recent heightened visibility in the media of trade negotiations
between the United States and
China. The cracking down of the
illegal GMO corn seed production in China also demonstrates action by the Chinese
government to better control the commercialization process of GMO
technologies. A recent publication from the Chinese Ministry of
Agriculture and Rural Affairs has placed GMO technologies as a key
agricultural green technology. Even though past slow government and
public acceptance of GMO corn seed technologies in China has delayed the realization of the
Company's technology investments, management believes the Company's
leading position and readiness in corn seed GMO technologies could
eventually result in a significant value to its
shareholders.
About Origin Agritech Limited
Origin Agritech Limited, founded in 1997 and
headquartered in Zhong-Guan-Cun (ZGC) Life Science Park
in Beijing, is China's leading agricultural biotechnology
company, specializing in crop seed breeding and genetic
improvement. Leading the development of crop seed biotechnologies,
Origin Agritech's phytase corn was the first transgenic corn to
receive the Bio-Safety Certificate from China's Ministry
of Agriculture. Over the years, Origin has established a robust
biotechnology seed pipeline including products with glyphosate
tolerance and pest resistance (Bt) traits. Origin operates breeding
stations nationwide located in key crop-planting regions. Product
lines are vertically integrated for corn. For further information,
please visit the Company's website
at: http://www.originseed.com.cn or http://www.originseed.com.cn/en/.
Forward-Looking Statements
This communication contains "forward-looking
statements" as defined in the federal securities laws, including
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements address
expected future business and financial performance and financial
condition, and contain words like "expect," "anticipate," "intend,"
"plan," "believe," "seek," "will," "would," "target," and similar
expressions and variations. Forward-looking statements address
matters that are uncertain. Forward-looking statements are not
guarantees of future performance and are based on assumptions and
expectations which may not be realized. They also involve risks and
uncertainties, many of which are beyond the company's control. Some
of the important factors that could cause the company's actual
results to differ materially from those discussed in
forward-looking statements are: failure to develop and market new
products and optimally manage product life cycles; ability to
respond to market acceptance, rules, regulations and policies
affecting our products; failure to appropriately manage process
safety and product stewardship issues; changes in laws and
regulations or political conditions; global economic and capital
markets conditions, such as inflation, interest and currency
exchange rates; business or supply disruptions; natural disasters
and weather events and patterns; ability to protect and enforce the
company's intellectual property rights; and separation of
underperforming or non-strategic assets or businesses. The company
undertakes no duty to publicly revise or update any forward-looking
statements as a result of future developments, or new information
or otherwise, should circumstances change, except as otherwise
required by securities and other applicable laws.
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SOURCE Origin Agritech Limited