American Dairy Announces Plan to Acquire Equity Interest in Ausnutria

17/08/07 American Dairy, Inc., one of the leading producers and distributors of milk powder and soybean products in China, announced that it has made a loan in the amount of approximately U.S. $10.0 million to an acquisition entity for the purpose of making a deposit or advance payment for the purchase of an equity interest in Ausnutria Dairy (Hunan) Company Ltd., a privately held distributor of high-quality nutritional, powdered milk and infant formula products based in Changsha, Hunan Province, China.

The loan is intended to result in American Dairy acquiring a 49% interest in Ausnutria Dairy (Hunan) Company Ltd. through a series of proposed transactions that have yet to be consummated. The Company cautions that there can be no assurance or guarantee that the proposed transactions will be consummated. Upon completion of the proposed transactions, American Dairy plans to enter into a strategic partnership with Ausnutria with the goal of leveraging their respective brands and retail and distribution networks, and to generate manufacturing and cost synergies.

Mr. Leng You Bin, Chief Executive Officer of American Dairy, stated, "Today's announcement demonstrates our plans to deploy capital to generate a return. We are positioning American Dairy to be the leading high quality, premium consumer brand company in China and announcement is another step in this long term plan."