China BCT Pharmacy Group, a leading pharmaceutical distributor, retail pharmacy, and manufacturer of pharmaceutical products in Guangxi Province, China, has announced that it has entered into an agreement with Milestone Longcheng Limited, a private equity firm, pursuant to which Milestone will purchase 9,375,000 shares of the Company's Series A Convertible Preferred Shares for an aggregate purchase price of $30 million.

The Preferred Shares carry a dividend of 5 percent and are convertible initially into an equal number of shares of China BCT Pharmacy's Common Stock at an initial conversion price of $3.20 per share. Under the agreement, Milestone will have the right to name one director and to recommend an additional independent director to the company's board, which will increase to seven directors upon closing of the transaction. The agreement also provides that Milestone will have consent rights with respect to certain operating matters. The holders of Preferred Shares will have pre-emptive rights with respect to future offerings and have voting rights with the common stock as well as separate voting rights with respect to certain extraordinary transactions. After issuance, the Preferred Shares will represent 18.5 percent of the outstanding share capital of the company. The transaction is subject to a number of closing conditions. The parties anticipate that the transaction will close approximately 30 days after signing.

"The transaction with Milestone provides us with additional capital to support our growth initiatives, including the expansion of China BCT's retail pharmacy business. We currently see a number of attractive acquisition opportunities in Guangxi Province and surrounding regions. We are very pleased to have developed this working relationship with Milestone and we plan to carefully deploy this new capital to create long term value for our shareholders," commented Hui Tian Tang, Chairman and CEO of China BCT Pharmacy.