IND DairyTech Limited announces further capital increase of RMB 106 million (CDN $16.4 million) in its Chinese subsidiary
August 16 2010 - 7:00AM
PR Newswire (Canada)
VANCOUVER, Aug. 16 /CNW/ -- VANCOUVER, Aug. 16 /CNW/ - IND
DairyTech Limited ("IND" or "the Company") (TSXV:IND) today
announced that it has entered into an agreement with China
Construction Bank International (Tianjin) Co., Ltd. ("CCB
International") and SAIF III Mauritius (China Investment) Limited
("SAIF"), also referred to as "the Investors". CCB International
will invest RMB 77 million (CAD $11.9 million) in cash and SAIF
will invest RMB 28.95 million (CAD $4.5 million) in cash to
subscribe for 20 million shares and 7.52 million shares of the IND
Lifetech (China) Co., Ltd. ("IND China"), respectively. IND China
is an indirect subsidiary of the Company, which is currently held
as to 94.19% by the Company through its wholly owned subsidiary IND
Lifetech Group Ltd ("IND Lifetech"). Following the capital
increase, the Company, CCB International and SAIF will respectively
hold approximately 76.67%, 13.52% and 5.08% of IND China. Shanghai
KP Technology Investment Development LLC ("Shanghai KP") will hold
approximately 1.35% of IND China and Jiangsu Etern Group Ltd. will
hold approximately 3.38% of IND China. In connection with the
capital increase, IND Lifetech has also entered into a Performance
Undertaking Agreement with the Investors, Ai De Diagnostic Co.,
Ltd. ("Ai De") and Jiabei (Jesse) Zhu, a control person of both the
Issuer and Ai De. Pursuant to the Performance Undertaking, IND
Lifetech has guaranteed a minimum annual net profit of RMB 50
million for 2010 for IND China. IND Lifetech and Shanghai KP have
agreed to compensate the investors on a pro rata basis in
accordance with their interest in IND China if such annual net
profit targets are not met. If the annual net profit target for
2010 is not met, the Company and Shanghai KP have agreed to
transfer up to 8.26 million shares of IND China to the Investors.
In addition, if: a) by October 20, 2010, the Company has not
started the application to TSXV regarding IND China's listing plan
in China or the application has been denied; or b) IND China is not
listed on a stock exchange in China by December 31, 2013 or the
Chinese Securities Regulatory Commission denies IND China's
application for a stock exchange listing prior to such date; or c)
IND China does not achieve the guaranteed annual net profit for
2010 and does not achieve 30% annual net profit growth in 2011; or
d) IND China does not disclose to the Investors material
information relating to IND China's operations, the Investors may
require IND Lifetech and Shanghai KP to buy back all their IND
China shares at a price equal to the original acquisition price
plus 15% interest per annum compounded annually less any dividends
received. Mr. Zhu and Ai De have agreed to guarantee the
obligations of IND Lifetech and Shanghai KP under the Performance
Guarantee or otherwise compensate Investors accordingly. The
completion of the capital increase is subject to approvals from
Chinese regulatory organizations and TSXV. The TSX Venture Exchange
has not reviewed and does not accept responsibility for the
adequacy or accuracy of this release. FORWARD LOOKING INFORMATION
This news release contains forward-looking statements and
information that are based on the beliefs of management and reflect
IND's current expectations. Such statements and information reflect
the current view of IND with respect to risks and uncertainties
that may cause actual results to differ materially from those
contemplated in those forward-looking statements and information.
By their nature, forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our
actual results, performance or achievements, or other future
events, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. The forward-looking information in this
news release includes revenue expected from cow sales, the
development and increases in herd size in China, the purchase of
Chinese Holstein cows (including cost savings expected to result
from the investment made in purchasing these cows), the use of
Canadian Holstein embryos to impregnate surrogate cows, the
establishment of large scale North American-style farming
operations in China, the size of IND as a Canadian Holstein dairy
company in China, and the aim of becoming a leading provider of
high quality raw milk to the Chinese dairy industry. There are a
number of important factors that could cause IND's actual results
to differ materially from those indicated or implied by
forward-looking statements and information. Such factors include,
among others, risks related to IND's business such as failure of
the business strategy and limited operating history, reliance on
farm development partners, disruptions due to bovine diseases,
dependence on biotechnology, reduction in government support and
access to raw materials; risks related to IND's operations, such as
additional financing requirements and access to capital, the
ability to repay debt, reliance on key personnel, fluctuation in
feedstock costs, fluctuations in costs of production, product
spoilage and liability, loss of embryo inventory, factors related
to milk production, fluctuations in milk prices, fluctuations in
milk demand, lack of specificity in certain agreements, litigation,
indemnities, insurance, competition, intellectual property and
variations in cow lactation periods; risks related to IND and its
business generally such as potential exposure to tax under Canadian
tax, regulations of the Peoples' Republic of China (the "PRC")
relating to offshore special purpose companies, recent PRC
regulations relating to cross-border mergers and acquisitions,
environmental protection, currency exchange rates and conflicts of
interest; and risks related to doing business in the PRC such as
tax, repatriation of profit and currency conversion, acquisition
and appropriation of land use rights, foreign investment, permits
and business licences, employment contracts, government
intervention, shareholders' rights and enforcement of judgments and
a developing legal system. IND cautions that the foregoing list of
material factors is not exhaustive. When relying on IND's
forward-looking statements and information to make decisions,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. IND has
assumed a certain progression of its business, which may not be
realized. It has also assumed that the material factors referred to
in the previous paragraph will not cause such forward-looking
statements and information to differ materially from actual results
or events. However, the list of these factors is not exhaustive and
is subject to change and there can be no assurance that such
assumptions will reflect the actual outcome of such items or
factors. For additional information with respect to certain of
these and other factors, refer to the risk factors section of IND's
Management's Discussion & Analysis dated April 28, 2010
available on SEDAR at www.sedar.com. The forward-looking
information contained in this news release represents the
expectations of IND as of the date of this news release and,
accordingly, is subject to change after such date. Readers should
not place undue importance on forward-looking information and
should not rely upon this information as of any other date. While
IND may elect to, it does not undertake to update this information
at any particular time except as required in accordance with
applicable securities legislation. Jesse Zhu, Chief Executive
Officer, IND DairyTech Limited, 604-522-1619, jessezhu@ind.ca;
James Xiang, VP Corporate Finance, IND DairyTech Limited,
416-886-1261, james.xiang@ind.ca; Bill Mitoulas, Investor
Relations, Stone Communications Service Limited, 800-336-9528,
scs@stoneco.com
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