Loan Agreement (4347P)
October 03 2011 - 9:17AM
UK Regulatory
TIDMCFC
RNS Number : 4347P
China Food Company PLC
03 October 2011
Press Release 3 October 2011
China Food Company Plc
("China Food" or the "Company")
Loan Agreement
China Food Company Plc (AIM:CFC), a leading Chinese manufacturer
of cooking and dipping sauces, is pleased to announce that is has
entered into a loan agreement with two of its significant
shareholders, Main World Investments Ltd ("Main World") and Lam
Soon Realty (Pte) Limited ("Lam Soon") (together "the Lenders").
The agreements are for US$1 million each.
The terms of the loan run for six months, at an interest rate of
10% per annum. As part of the loan, the Lenders will receive
500,000 warrants, each of which are exercisable within the next two
years at a price of 50 pence per ordinary share. There is also a
monitoring fee of 2% per annum from the date of the receipt of the
funds until such time where the Loan and its interest are fully
repaid to the Lenders.
Pursuant to this, Main World, who has agreed to extend its
shareholder loan to the Company amounting to US$5,838,800
(approximately GBP3.63 million) by another 12 months to November
2013.
John McLean, Chairman of China Food, commented: "The Board is
pleased to have secured this loan with two of its significant
shareholders, which will enable the Company to accelerate the roll
out of our new soya sauce products in Shandong province and
therefore capitalise on the significant market opportunity. Given
the increasingly tightening credit from Chinese banks, this loan
provides the Company with working capital to support the growth of
our new products with the pending launch this month."
"We look forward to updating shareholders on the Company's
progress as we launch our new products in the domestic market."
The provision of the loan by Main World is considered a related
party transaction pursuant to the AIM Rules for Companies because
Main World is a substantial shareholder in the Company.
The Directors, having consulted with the Company's nominated
adviser, finnCap, consider that the terms of the loan are fair and
reasonable insofar as the Company's shareholders are concerned.
- Ends -
For further information:
China Food Company Plc
John McLean, Non-Executive Chairman Tel: +44 (0) 7768 031
454
Raphael Tham Wai Mun, Chief Executive
www.chinafoodcompany.com
finnCap
Geoff Nash, Nominated Advisor Tel: +44 (0) 20 7600
1658
Numis Securities
David Poutney, Head of Corporate Tel: +44 (0) 20 7260
Broking 1000
Media enquiries:
Abchurch Communications
Henry Harrison-Topham / Joanne Shears Tel: +44 (0) 20 7398
/ Mark Dixon 7729
mark.dixon@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 Tesco, 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 first phase of expansion is now complete at the Group's new
factory, which was officially opened on 12 May 2010, and this
doubles China Food's current capacity. It is proposed that in due
course there will be a further two phases, adding capacity of
100,000 tonnes through the building of 230 additional silos. The
Group plans to expand into the neighbouring provinces such as Henan
and Hebei.
The Group also operates an animal feed business, Fuss Feed. This
business produces premix, concentrate and compound feedstuffs, and
is the third largest animal feed business in Shandong, an important
province for the production of livestock in China.
The Group's operations are highly scalable and able to support
further growth, and with net assets of GBP34.5 million (as at 31
December 2010), the prospects for China Food are strong. Further
information on China Food Company can be found at
www.chinafoodcompany.com.
*McKinsey Quarterly Report: Is your emerging market strategy
local enough?, April 2011
**Source: Datamonitor report: Sauces, Dressings and Condiments
in China to 2013, April 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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