VANCOUVER, June 25 /CNW/ - IND DairyTech Limited ("IND" or "the Company") (TSXV:IND) today announced that the Company has entered into an agreement with Jiangsu ETERN Group Ltd. ("ETERN") pursuant to which ETERN will invest RMB 19.25 million (approximately C$2,883,650) in cash to subscribe for 5 million shares of the IND Lifetech (China) Co., Ltd. ("IND China", and the investment, the "ETERN Investment"). IND China is an indirect subsidiary of the Company which is currently held as to 97.61% by the Company through its wholly owned subsidiary IND Lifetech Group Ltd., and as to 2.39% by Shanghai KP Technology Investment Development LLC ("Shanghai KP"). The Company will also through IND Lifetech inject an additional RMB 77 million (approximately C$11,534,600) in cash to subscribe for 20 million additional shares of IND China. Following the ETERN Investment, ETERN will hold approximately 4.15% of IND China, Shanghai KP's interest in IND China will be diluted down to approximately 1.66%, and the Company will hold approximately 94.19% of IND China.
In connection with the ETERN Investment, the Company has also entered into a performance undertaking agreement (the "Performance Undertaking") with ETERN, Jiabei (Jesse) Zhu, a control person of the Issuer, and Ai De Diagnostic Co., Ltd. ("Ai De"), a company controlled by Mr. Zhu. Pursuant to the Performance Undertaking, the Company has guaranteed a minimum annual net profit of RMB 50 million for 2010 and RMB 110 million for 2011 for IND China. The Company and Shanghai KP have agreed to compensate ETERN 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 1.5 million shares of IND China to ETERN. If the annual net profit target for 2011 is not met, the Company and Shanghai KP have agreed to transfer up to 1.25 million shares of IND China to ETERN.
In addition, if IND China is not listed on a stock exchange in China by December 31, 2012, then ETERN shall have the right to transfer its IND China shares to a third party, which third party shall enjoy all the rights held by ETERN hereunder. If IND China is not listed on a stock exchange in China December 31, 2013 or the Chinese Securities Regulatory Commission denies IND China's application for a stock exchange listing prior to such date, or if IND China does not disclose to ETERN material information relating to IND China's operations, then ETERN may require IND Lifetech to buy back all the IND China shares held by ETERN at price equal to the original acquisition price plus 15% interest per annum compounded annually less any dividends received by ETERN on an after tax basis. Mr. Zhu and Ai De have agreed to guarantee the obligations of IND Lifetech under the Performance Guarantee or otherwise compensate ETERN accordingly.
About IND Dairytech Ltd.
IND, through its operating subsidiaries, is an emerging raw milk and Holsteins producer in China that is seeking to become a leading provider of high quality raw milk and Holsteins to the Chinese dairy industry. To meet China's increasing demand for dairy products, the Company is using Canadian cattle genetics and North American farming practices to establish and develop its dairy herd in China.
The Company plans to develop its herd in China through the use of advanced breeding techniques employing Canadian Holstein embryos that it intends to use to impregnate surrogate cows. These embryos have been created through in vitro fertilization using sexed semen to achieve an approximate 90% female birth rate. The use of these advanced breeding techniques is expected to allow the Company to rapidly expand its herd. The use of Canadian Holstein embryos also provides a practical solution to China's ban on the import of live Canadian cattle.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
FORWARD LOOKING INFORMATION
Certain information set out in this News Release constitutes forward-looking information, which may include information relating to estimates of sales and revenue of IND. Forward-looking statements (often, but not always, identified by the use of words such as "expect", "may", "could", "anticipate" or "will" and similar expressions) may describe expectations, opinions or guidance that are not statements of fact and which may be based upon information provided by third parties. Forward-looking statements are based upon the opinions, expectations and estimates of management of the Company as at the date the statements are made and are subject to a variety of known and unknown risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. In light of the risks and uncertainties associated with forward-looking statements, readers are cautioned not to place undue reliance upon forward-looking information. Although the Company believes that the expectations reflected in the forward-looking statements set out in this press release or incorporated herein by reference are reasonable, it can give no assurance that such expectations will prove to have been correct. The forward-looking statements of the Company contained in this press release, or incorporated herein by reference, are expressly qualified, in their entirety, by this cautionary statement.
SOURCE IND DAIRYTECH LIMITED
For further information: For further information: Jesse Zhu, Chief Executive Officer, IND DairyTech Limited, 604-522-1619, firstname.lastname@example.org; James Xiang, VP Corporate Development, IND DairyTech Limited, 416-886-1261, email@example.com; Bill Mitoulas, Investor Relations, Stone Communications Service Limited, 800-336-9528, firstname.lastname@example.org