Feihe International Announces Agreement to Sell Dairy Farms
Pursuant to the Agreement, the Company agreed to sell to the Purchaser all of its equity interests for an aggregate purchase price of approximately US$131.8 million.
Aug 2 2011 --- Feihe International, Inc., one of the leading producers and distributors of premium infant formula, milk powder and soybean, rice and walnut products in China, announced that it has entered into an Equity Purchase Agreement (the "Agreement") with Haerbin City Ruixinda Investment Company Ltd. (the "Purchaser"). Pursuant to the Agreement, the Company agreed to sell to the Purchaser all of its equity interests of Heilongjiang Feihe Kedong Feedlots Co., Limited and Heilongjiang Feihe Gannan Feedlots Co., Limited for an aggregate purchase price of approximately US$131.8 million, comprised of approximately US$17.8 million in cash and six equal quarterly deliveries of raw milk in an aggregate value of approximately US$114.0 million.
Until the Purchaser has met its milk delivery obligations to the Company, the Purchaser must exclusively supply raw milk to the Company and thereafter must prioritize any Company requirements for extra raw milk. The Company will specify the feeding forage and feeding method and the quality of raw milk that the Purchaser provides. The exclusive supply period for the Company will be an unlimited time period.
Mr. Leng You Bin, the Company's Chairman and Chief Executive Officer, stated, "We are extremely pleased to enter into the Equity Purchase Agreement with Haerbin City Ruixinda Investment Company Ltd. for the two world-class demonstration dairy farms. A professional company will operate the two dairy farms and we will be able to get the same premium quality dairy farm raw milk at an unlimited exclusive supply period. This transaction will allow us to improve our liquidity and reduce our debt level, as well as eliminate our dairy farm operating expenses, while still ensuring our supply of high quality milk. It will also allow us to focus on infant formula manufacturing and marketing in order to achieve our long-term leadership position within China's infant formula industry."
