TORONTO, Jan. 8, 2013 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") is pleased to announce that it has successfully completed the acquisition of all the issued and outstanding shares of Tieling Wanshunda Starch Company Ltd. ("Tieling") a wholly foreign owned enterprise ("WFOE") under the laws of the PRC (The "Acquisition").
"The acquisition of Tieling represents an opportunity to grow the company's annual corn processing capacity from current 0.9 million tons to 1.5 million tons at an extremely attractive price" stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem.
Under the terms of the Acquisition (available on SEDAR), the purchase price of Chinese Yuan (CNY) 280 million (Canadian $44.8 million) will be satisfied as follows:
- CNY 250 million ($40 million) in the form of account receivables of Asia Bio-Chem, and
- CNY 30 million ($4.8 million) note payable 12 months after the completion of all title changes and filing approval with the local government.
The accounts receivable which Asia Bio-Chem will transfer represent amounts due over one year.
Completion of the Acquisition is subject to terms and conditions as specified in the acquisition agreement which will be filed on SEDAR.
About Tieling Wanshunda Starch Company Ltd.
The sole operations of Tieling is a corn processing plant in Tieling City of Liaoning Province in the PRC. As part of this plant, Tieling owns a land lease for a 98,881 M2 parcel of land with a remaining term of 46 years, a 65,200 M2 manufacturing and office buildings, a power facility and modern equipment relating to a complete corn starch processing plant. The Tieling plant was constructed in early 1990s and upgraded in 2007 and includes up to date and fully functional equipment which employs the same process and technology as employed at our updated Changtu facility. The plant has an estimated capacity of 600,000 tonnes of corn per annual.
Tieling owns a license, issued by the NDRC, to construct and operate a plant to produce 420,000 tonnes of starch and 350,000 tons of corn sweeteners per year. The sweetener plant was never built and the plant had been producing only corn starch, germ, gluten and fiber.
The Tieling plant was shut down in July 2012 due to low margins however all equipment is in good working order.
The Company will immediately file a Material Change Report as well as file a redacted copy of the acquisition Agreement on SEDAR. Further, in accordance with National Instrument 51-102, the Company will file a Business Acquisition Report within 75 days of completion of the Acquisition.
About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the People's Republic of China ("PRC"), is in the business of processing corn into cornstarch, corn germ, gluten, and fiber for sale into the domestic Chinese market. From its plants in Liaoning and Heilongjiang Province, the Company has a total processing capacity of 900,000 tonnes of corn per year. With the completion of the Acquisition, Asia Bio-Chem will increase its total processing capacity to 1.5 million tonnes of corn per year.
This news release contains certain statements that may be deemed "forward looking statements". Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects,", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward looking statements, except as required by law, in the event that management's beliefs, estimates or opinions, or other factors, should change.
SOURCE: Asia Bio-Chem Group Corp.
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