Biostime and Arla Foods Sign a 10-Year Financing and Supply Agreement

The Company shall through the Financing gain a right to specified volume of supply of infant formula products from Arla Foods with a maximum volume of up to 20,000 tons per year beginning from 2015 and repayment of the Financing with interests accrued thereon.

25 Jun 2012 --- The Board is pleased to announce that Biostime Company and Arla Foods entered into a Financing and Supply Agreement, for a term of ten years.

Pursuant to the Financing and Supply Agreement, the Company shall, within one month after signing of the Financing and Supply Agreement, provide to Arla Foods the Financing in the amount of DKK81.5 million (equivalent to approximately HK$108 million), corresponding to 50% of Arla Foods’ total investment for capacity expansion, for the purpose of acquiring and installing processing and packaging equipment at the production facility of Arla Foods in Denmark for the production of infant formula products to be supplied to the Company according to its specific requirements.

The Company shall through the Financing gain a right to specified volume of supply of infant formula products from Arla Foods with a maximum volume of up to 20,000 tons per year beginning from 2015 and repayment of the Financing with interests accrued thereon. The Financing shall be repaid by Arla Foods to the Company within a five-year period by deduction of a fixed amount per kilogram of the infant formula products supplied by Arla Foods to the Company in accordance with the Financing and Supply Agreement.

Pursuant to this agreement, the Company shall also purchase infant formula products from Arla Foods at a specified minimum purchase volume for each year during the term of the Financing and Supply Agreement.

As at the date of this announcement, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, Arla Foods and its ultimate beneficial owner(s) are Independent Third Parties.