China Food Company PLC Issue of Loan Notes and Company Update (1653V)

TIDMCFC

RNS Number : 1653V

China Food Company PLC

24 October 2014

 
   Press Release     24 October 2014

China Food Company Plc

("China Food", the "Group" or the "Company")

Issue of Loan Notes and Company Update

China Food Company Plc (AIM: CFC), a leading Chinese manufacturer of cooking and dipping sauces, today announces that it has issued 39 will issue up to a further 61 Convertible Loan Notes of GBP1,000 each ("Loan Notes") in lieu of payment for professional services.

The Loan Notes issued are A Loan Notes and all Loan Notes may be converted into ordinary shares at any time up to maturity at a price of 15.5 pence at the option of the Loan Note Holder. Details of the terms of the Loan Notes were announced on 6 September 2013 and following the issue of 39 Loan Notes there are Loan Notes totaling GBP5.7m in aggregate.

As announced on 11 July 2014, the Loan Notes are technically in default following suspension of the Company's shares from trading on AIM on 25 June 2014. The Company is in contact with a number of Loan Note holders and as previously notified intends to redeem the loan notes from the proceeds arising from the sale of either its operating businesses.

The proposed sale of the Company's animal feed and condiments businesses continues. As previously announced, the intended sale of the animal feed business has progressed and the Company has received a credible proposal from management to acquire the animal feed business for net asset value, however completion of any transaction is unable to occur until the condiments business disposal is completed (as the land on which the animal feed business operates is collateralised as part of the overall bank facility with the condiments business). The discussions on the sale of the condiments business continue with a number of parties, one of whom, is undertaking due diligence. No offer has been received at this stage and there is no certainty that any offer will be received for condiments. In the interim, the condiments business continues to operate on a cash break-even basis with activity levels utilising approximately 30% of capacity. The animal feed business is operating in line with the MBO team's expectations. All working capital in China is re-invested into maintaining the day to day operations.

The Company has very limited working capital and the payment of Loan Notes is reliant on transferring funds from China. Without a sale of the operating businesses the Company will not have sufficient funds to redeem the Loan Notes which are due for redemption on 3 November 2014. Further updates will be provided in due course.

- Ends -

For further information:

 
 China Food Company Plc 
 John McLean, Chairman    Tel: +44 (0) 7768 031 454 
                           www.chinafoodcompany.com 
 
 
 finnCap 
 Geoff Nash / Ben Thompson (Corporate   Tel: +44 (0) 20 7220 
  Finance)                                              0500 
 
 Numis Securities 
 David Poutney (Joint Broker)           Tel: +44 (0) 20 7260 
                                                        1000

Media enquiries:

 
 Abchurch Communications 
 Henry Harrison-Topham / Canace Wong     Tel: +44 (0) 20 7398 
                                                         7714 
 canace.wong@abchurch-group.com        www.abchurch-group.com

Notes to Editors:

China Food is a well-established food manufacturing business based in Shandong province in the People's Republic of China, a region with a population of circa 94 million. A recent report identified Shandong province as one of the five most attractive 'city clusters' in China, due to the high number of large cities in the province*. The Group manufactures numerous different product lines including soya sauce and bean paste, all targeting the Chinese domestic market, and sold through a network of distributors and outlets of supermarket chains in the north-eastern region of the PRC, such as Walmart, Carrefour and Jialejia.

The Chinese sauces, dressings and condiments market is expected to be worth CNY115 billion (US$15 billion) by 2013, driven by Chinese population growth and economic prosperity. The Chinese domestic market is rapidly expanding, and the Group is well positioned to benefit from China's demographic growth and increased urbanisation.

The Group's operations are highly scalable and able to support further growth, and with net assets of GBP32 million (as at 30 June 2013), the prospects for China Food are strong. Further information on China Food Company can be found at www.chinafoodcompany.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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