- Company Named One of China's Most Influential Companies -
BEIJING, Jan. 20 /PRNewswire-FirstCall/ -- American Dairy, Inc.
(NYSE Arca: ADY), one of the leading producers and distributors of
premium infant formula, milk powder and soybean, rice and walnut
products in China, today provided a business update. The Company
continues to increase its production output and customer support to
meet consumer demand for reliable, high quality, premium infant
formula products. Since the dairy scandal in China broke in
September 2008, a series of food-related product inspections have
been carried out by China's General Administration of Quality
Supervision, Inspection and Quarantine (AQSIQ). With more than 10
tests conducted to date, American Dairy has successfully passed all
inspections. As a result, the Company's Feihe branded products
continue to sell out in many areas. The Company continues to
operate production facilities at full capacity 24 hours a day to
keep up with demand, and additional packaging equipment has been
installed. The Company continues its dominate position in second-
and third-tier cities and has accelerated its presence in
first-tier cities such as Beijing. In an effort to solidify and
expand its increased brand recognition, the Company has continued
its aggressive nationwide marketing campaigns, with television
commercials running on Chinese Central Television Channels (CCTV)
1, 2, 3 and 6, and over six provincial stations that air all across
China. In a recent survey by AC Nielsen, the Company was ranked No.
1 fast growing infant formula company after the dairy crisis
occurred in September 2008. The Company also provides training and
support to its growing sales and marketing team nationwide. Most
recently, American Dairy hosted its annual sales conference in
Henan province, where Feihe is the best-selling infant formula
brand, and more than 700 people participated in the sales training
conducted by leading industry experts. American Dairy's Feihe
operation is the first infant formula company to build its own
organic dairy farms that meet international standards, with each of
its two farms able to accommodate approximately 10,000 to 12,000
cows. The Company plans to continue to import Australian Holstein
cows to its Gannan and Kedong dairy farms in Heilongjiang Province,
which currently have over 8,000 Australian Holstein cows. The
Company anticipates that each farm will provide approximately
60,000 to 70,000 tons of organic milk a year to be used mainly in
the Company's branded products when becoming fully operational. Mr.
Jonathan H. Chou, Chief Financial Officer, states, "Our focus has
always been on the pursuit of high quality products for consumers,
and the construction of our dairy farms demonstrates the Company's
dedication to that vision. An integrated strategy will ensure that
our products remain the premiere infant formula manufactured in
China." Since 1962, the Company's Feihe branded products have been
recognized for their quality and, in its 47 year history, Feihe has
consistently passed all government quality inspections, including
the recent inspections for melamine. The Company has always adhered
to a quality-first standard. As previously announced, the Company's
production facilities exceed consumer goods manufacturing standards
and are designed to meet and exceed pharmaceutical standards.
American Dairy's facilities are one of the few that have processing
areas which meet a 300,000 cleanliness purification standard, which
means that there are less than 300,000 dust particles per cubic
centimeter of air. In a standard room, dust particles can reach
over two million dust particles per cubic centimeter of air.
Continuing its commitment to quality, the Company has also added
additional testing equipment to its already extensive testing and
quality control procedures. Domestic and International Recognition
American Dairy's Feihe brand was named one of China's 500 most
influential brands at The World Brand Summit jointly hosted by
World Famous Brands Assembly, the United States China Chamber of
Commerce and the Universal City TV Stations Joint Research Center
of the World Business on January 1, 2009. The selection committee
evaluated more than 3,000 companies in Mainland China, Macau, Hong
Kong and Taiwan based on the selection criteria including
popularity, reputation, credibility, satisfaction, loyalty,
influence, growth and innovation of the brands. American Dairy's
Feihe brand is one of the seven dairy enterprises recognized at the
conference. The Company's flagship brand, Feihe, was recently voted
as one of the top ten 'Most Trusted Brands' by consumers in an
online poll conducted by SINA Corporation. Among products
manufactured in China, Feihe was voted the No. 1 most trusted
brand. Previously, Feihe was named one of the "Top Ten Best Infant
Formula" and the "Most Energetic Brand" at the Annual Baby and
Infant Industry Ceremony hosted by SINA. Mr. Leng You Bin, Chief
Executive Officer, states, "I was honored to be interviewed by
Cable News Network ('CNN') International recently, and provided CNN
with a tour of our first class research, packaging and distribution
center in Langfang, China. I believe this demonstrates that Feihe's
brand is recognized not only domestically but also internationally.
As the most trusted brand manufacturer in China, we will continue
our commitment to adhere to international standards and high
quality production and to bring our consumers the highest quality
products." The Company was also recently invited by the Chinese
government to attend a meeting to discuss the fate of the company
at the center of the tainted milk scandal. While the Company has no
plans to acquire that company, American Dairy was honored to be one
of the five nationally recognized dairy companies invited to
participate in the discussions. Mr. Liu Hua, Vice Chairman, stated,
"The invitation is a testament to the fact that the Chinese
government recognizes our Company as a key player in the dairy
industry. We remain committed to this responsibility and will
continue to produce high quality, premium products for consumers in
China and worldwide." American Dairy's products are already one of
China's most recognizable brands and have won awards including
China's "Top Brands" and "Well Known Trademarks." In July 2007,
Feihe Dairy was named "National Leading Enterprise of Agricultural
Industrialization" by China's Ministry of Agriculture, National
Development and Reform Commission, Ministry of Finance, Ministry of
Commerce, The People's Bank of China, State Administration of
Taxation, China Securities Regulatory Commission and the China
Supply and Marketing Cooperative for specializing in agricultural
production and processing. Only 580 enterprises in China have been
awarded this certificate to date. The Company was awarded the
certificate as a result of its influences on and contribution to
China's agricultural industry. Repurchase of an Additional $3.77
Million of Convertible Notes The Company also announced that, as
part of the restructuring of the Company's outstanding 1%
Guaranteed Senior Secured Convertible Notes due 2012 (the "2012
Notes"), the Company completed the second phase in the repurchase
of its outstanding 2012 Notes. As previously announced, in November
2008 the Company reached agreement with the holders of 100% of the
$80 million in outstanding principal amount of the 2012 Notes to
repurchase the Notes at 115% of the principal amount thereof, in a
series of installments payable by October 15, 2009. In accordance
with the terms of the agreement with those noteholders, on January
15, 2009 the Company repurchased an additional $3.77 million in
principal amount of the 2012 Notes for an aggregate repurchase
price of $4.33 million. The Company funded the repurchase using
proceeds from operations. After giving effect to the completion of
the first and second tranches of the repurchases, the Company now
has approximately $66.1 million in principal amount of the 2012
Notes outstanding. Under the terms of the restructuring, the
Company has the right to repurchase the remaining 2012 Notes for an
aggregate repurchase price of approximately $76.6 million, payable
in installments of $15.33 million by each of April 15 and July 15,
2009, and the remaining $46.0 million by October 15, 2009. The 2012
Notes ceased accruing interest, and the right to convert the notes
into shares of the Company's common stock was suspended, as of
November 13, 2008, the date that the restructuring took effect,
provided that the Company completes the repurchase of the 2012
Notes by the specified deadlines in accordance with the terms of
the restructuring agreement. In the event that the Company does not
make any of the payments due on April 15, July 15 or October 15,
2009, certain of the waivers granted as part of the restructuring
by the holders of the 2012 Notes with respect to provisions of the
notes would terminate, interest would begin to accrue again and
would be subject to increases if certain requirements are not met,
and the holders would again have the right to convert the 2012
Notes into shares of common stock. Pending Re-audit of Historical
Financial Statements As previously announced, the Company engaged
Grant Thornton, the Hong Kong member firm of Grant Thornton
International, as its independent registered public accounting firm
in 2008, and proactively initiated voluntary re-audits of the
Company's financial statements for certain prior years (the
"Re-audits"). The Re-audits are continuing, and when they are
completed, the Company expects to file reports with the SEC that
will include financial statements for the periods that are the
subject of the Re-audits, the 2007 fiscal year, and the 2008 fiscal
year. About American Dairy, Inc. American Dairy, Inc. conducts
operations in The People's Republic of China ("China") through its
wholly owned subsidiary, Feihe Dairy. Founded in 1962, Feihe Dairy
is one of the leading producers and distributors of premium infant
formula, milk powder and soybean, rice and walnut products in
China. Feihe Dairy is headquartered in Beijing, China, and has
processing and distribution facilities in Kedong, Qiqihaer,
Baiquan, Gannan, Shanxi, and Langfang.
http://www.americandairyinc.com/ / http://www.feihe.com/ Certain of
the statements made herein constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements typically involve risks and uncertainties
and may include financial projections or information regarding our
future plans, objectives or performance. Actual results could
differ materially from the expectations reflected in such
forward-looking statements as a result of a variety of factors,
including the risks associated with the effect of changing economic
conditions in The People's Republic of China, variations in cash
flow, reliance on collaborative retail partners and on new product
development, variations in new product development, risks
associated with rapid technological change, and the potential of
introduced or undetected flaws and defects in products, and other
risk factors detailed in reports filed with the Securities and
Exchange Commission from time to time. DATASOURCE: American Dairy,
Inc. CONTACT: U.S., Ashley Ammon and Wei-Jung Yang, both of
Integrated Corporate Relations, Inc., +1-203-682-8200, for American
Dairy, Inc. Web Site: http://www.americandairyinc.com/
http://www.feihe.com/
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