Renhuang Pharmaceuticals, Inc, a leading provider of natural health care products in the People's Republic of China (PRC), announced it completed the transaction to acquire the Qingyang Herbal Extracting Factory from Yerui Pharmaceutical Co. Ltd. On February 26, 2007, the Company announced the signing of the letter of intent for this acquisition.
The Qingyang Herbal Extracting Factory, located in Yanshou Township, Harbin, China, is a manufacturing facility that processes raw herbal plants into extracts - the intermediate material for Chinese herbal medicine finished products. This acquisition is consistent with Renhuang's strategy of expanding its herbal extracting capabilities, which will position the Company well for further growth.
The acquired facility is capable of processing approximately 18,000 tons of herbal raw materials into extracts, doubling the Company's current herbal extraction capacity. The factory is located in proximity of herbal planting farms, allowing easy access to herbal raw materials, including Acanthopanax for making Siberian Ginseng derived products, Isatis for making Ban Lan Gen, and Schisandra chinensis for making other traditional herbal medicines.
Renhuang Pharmaceuticals will immediately begin the process of integrating the newly acquired extraction factory into its existing manufacturing facility. The Company will introduce its best practices and technologies to the new facility and consider additional investments to upgrade or replace machinery and equipment in order to improve efficiency and reduce operating costs. Given that this is an asset-only acquisition, approximately 100 staff including management personnel, technical personnel, and factory workers will need to be hired gradually and trained to operate the facility in order to bring the factory to full production.
Under the terms of the agreement, Renhuang acquired the facility for RMB 3,735,000 in cash (approximately USD $500,000) including assumed bank loan and interest of RMB 1,320,000. The Company has already made a cash payment of RMB 2,415,000 to the seller. The RMB 1,320,000 bank loan and interest are expected to be repaid directly to the bank within 3 months and the Company is negotiating with the bank to that effect.
Source:佚名