XI'AN, China, Jan. 9, 2017 /PRNewswire/ -- China Green Agriculture, (NYSE: CGA) ("China Green Agriculture", "we" or the "Company"), a company that mainly produces and distributes humic acid-based compound fertilizers, other varieties of compound fertilizers and agricultural products through its subsidiaries in China, today announced that the Company had completed new strategic acquisitions of two companies, Sunwu Xiangrong Agricultural Materials Co., Ltd. ("Xiangrong"), and Anhui Fengnong Seed Co., Ltd. ("Fengnong") in China. The Company's wholly-owned subsidiary, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., ("Jinong") a company organized under the laws of the People's Republic of China, entered into related acquisition agreements of (i) Strategic Acquisition Agreements (the "SAA"), (ii) Agreements for Convertible Notes (the "ACN"), and (iii) VIE Agreements, with the shareholders of Xiangrong and Fengnong on January 1, 2017.
On June 30 2016, in similar transactions, the Company acquired six agriculture sales companies in China. (The detail of the June 2016 acquisitions is at: https://www.sec.gov/Archives/edgar/data/857949/000114420416111996/v443872_8k.htm) The current acquisitions followed up with the acquisitions from June 2016. By entering into all these strategic transactions, the Company is developing a new wholesale business, in addition to its existing manufacturing and production segments. Building a new wholesale business is the center of the Company's expansion plan, which aims to transform the Company from a manufacturer to a platform company.
Similar to the companies in June 2016 transactions, the two newly acquired companies, Xiangrong and Fengnong, had been engaged in the sales distribution of agriculture materials such as fertilizers, pesticides, agricultural chemicals, for years. Dominant in their local markets, the eight sales companies in total are forming the Company's proprietary wholesale network.
- The new acquisitions rolled out phase II for the expansion of wholesale business segment.
- The purchase consideration in total includes $1.2 million in cash, and $1.7 million in convertible notes.
- Convertible notes are due in 3 years with an annual fixed rate of 3%.
- The per share conversion price of the note is the higher of the following: (i) $5.00 per share* or (ii) 75% of the closing price of the Company's common stock on the maturity date.
The acquired companies are located in the following two provinces in China:
Number of acquired companies
*Such a conversion occurs if the performance of the acquired company hit a minimum of 10% of annual compound growth rate within the three years and if Jinong elects to have the note converted into the Company's common shares. Whether to convert the notes into cash, equity or a combination of both is at the discretion of Jinong.
(The detail of the Jan 2017 acquisitions is at: https://www.sec.gov/Archives/edgar/data/857949/000121390017000145/f8k010117_chinagreenagri.htm)
"We had successfully closed a new round of strategic acquisitions. We welcome our new team members, the founders of Xiangrong and Fengnong, on board," said Mr. Zhuoyu Li, President of the Company, who is the architect and lead of the acquisitions. "Let's work together to unlock the intrinsic value of our Company. We will transform from a manufacturer and wholesalers into a platform venture jointly."
"I'm very happy with the success of this new round of acquisitions at the beginning of 2017. Given the record, I'm also equally happy with the performance of the other six companies we acquired six months ago," said Mr. Tao Li, the Chairman and CEO of the Company. "I have full confidence in Zhuoyu and his team. I look forward to phase II in the expansion of wholesale business."
About China Green Agriculture, Inc.
The Company produces and distributes humic acid-based compound fertilizers, other varieties of compound fertilizers and agricultural products through its wholly-owned subsidiaries, i.e.: Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. ("Jinong"), Beijing Gufeng Chemical Products Co., Ltd ("Gufeng") and a variable interest entity, Xi'an Hu County Yuxing Agriculture Technology Development Co., Ltd. ("Yuxing"). Shaanxi Lishijie Agrochemical Co., Ltd. ("Lishijie"), Songyuan Jinyangguang Sannong Service Co., Ltd. (Jinyangguang"), Shenqiu County Zhenbai Agriculture Co., Ltd. ("Zhenbai Argi"), Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd. ("Wangtian"), Aksu Xindeguo Agricultural Materials Co., Ltd. (Xindeguo"), and Xinjiang Xinyulei Eco-agriculture Science and Technology co., Ltd. ("Xinyulei"). For more information, visit http://www.cgagri.com. The Company routinely posts important information on its website.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the Company's business, products and financial results. The Company's actual results may differ materially from those anticipated in the forward-looking statements depending on a number of risk factors including, but not limited to, the following: general economic, business and environment conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, the execution of its ten-year growth plan, a satisfactory conclusion of the pending securities class action litigation and various other factors beyond the Company's control. All forward-looking statements are expressly qualified in their entirety by this Safe Harbor Statement and the risk factors detailed in the Company's reports filed with the SEC. China Green Agriculture undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release, except as required by applicable law or regulations.
For more information, please contact:
China Green Agriculture, Inc.
Mr. Fang Wang (English and Chinese)
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SOURCE China Green Agriculture, Inc.