TORONTO, ONTARIO--(Marketwired - Jan. 6, 2014) - GreenStar Agricultural Corp., ("GreenStar" or the "Corporation") (TSX VENTURE:GRE) today announced that it has commenced the closing procedures for the acquisition of Bayannur City, Inner Mongolia Autonomous Region, PRC, based Beichen Tomato Products Company ("Beichen"). The RMB 25.0 Million (CDN$4.2 Million) purchase price was paid as to RMB 22.0 Million (CDN$ 3.7 million) in cash from GreenStar's treasury, and RMB 3.0 Million (CDN$ 500,000) was held back by GreenStar for 90 days to allow for post closing adjustments. Final closing is expected within 30 days, pending receipt of all governmental approvals and issuance of a new business license. Beichen will continue to operate under its current name as a wholly owned subsidiary of Fujian Pucheng Star of Green Foodstuff Co. Ltd., which in turn is a wholly owned subsidiary of GreenStar Agricultural Corp. After final closing, GreenStar plans to immediately begin expanding Beichen's current production capacity of 20,000 tons of tomato pulp per annum based on one production line, to 40,000 tons per annum by 2015 with the purchase and commissioning of an additional automated production line, which is expected to produce an additional 20,000 tons of tomato pulp per year.
GreenStar also announced its plans to expand the tomato paste production capacity at its Pucheng, Fujian Province, PRC manufacturing facilities. The expansion which is to be completed over a two-year period, will include the construction of a new building on 10,000 m2 of land adjacent to GreenStars' current operations, to house two new automated tomato paste production and packaging lines, together with additional warehouse space and staff to support the increased production volumes. Upon completion of the expansion, which is slated for 2015, by GreenStar will absorb 20,000 to 27,000 tons of Beichen's tomato pulp production capacity annually, with the remaining pulp production from Beichen being sold directly to third party customers. In the past three years, Beichen sold its entire production volume of 20,000 tons of tomato pulp to third parties. GreenStar's tomato paste production capacity will increase from the current production volume of 21,000 tons per annum to 80,000 to 100,000 tons, which will include an additional 30,000 to 40,000 tons of tomato paste that is expected to be generated from each of the two additional new production lines to be added with more advanced technology adapted by GreenStar to improve production efficiency. The clearing of land to accommodate the GreenStar Pucheng expansion has already commenced and is expected to be construction ready by the third quarter of 2014.
Commenting on the Beichen acquisition and Pucheng expansion, Mr. Guan Lianyun, GreenStar's CEO stated, "With the closing of the Beichen acquisition, we have completed the first part of our 2014 growth plans to become a vertically integrated tomato products producer and to capture increased gross margins and synergies available to us through the combination of the two operations. We also look forward to expanding our footprint into North America in the coming months."
About Beichen Tomato Products Company
Beichen Tomato Products Company, a subsidiary of Beichen Resources Group, of Bayannur City, Inner Mongolia Autonomous Region, PRC, was established in March 2007 and operates a 9,630 square meter tomato pulp production plant located on a 20,000 square meter property. Current annual production capacity is 20,000 tons and audited annual revenues and gross margins for the past three fiscal years were;
| Revenues |
|
Gross Margin% |
|
| |
|
|
|
| 2010 - RMB74,657,866 (CDN$11,383,085) |
|
38.76% |
|
| |
|
|
|
| 2011 - RMB80,612,222 (CDN$12,361,078) |
|
37.43% |
|
| |
|
|
|
| 2012 - RMB87,696,034 (CDN$13,912,976) |
|
39.14% |
|
Beichen employs 59 part time and 15 full time production workers and 8 administrative staff during tomato harvesting season, and also maintains on-site living facilities for its workers during this time. All production functions are automated and digitally controlled.
About GreenStar Agricultural Corporation
GreenStar operates two main divisions, agricultural and food processing. The agricultural division is involved in the cultivation and harvesting of agricultural products such as fresh fruit and vegetables, for sale either directly as fresh fruit and vegetables or canned, and sold overseas and domestically. The food processing division is primarily involved in the processing of canned food, which includes canned tomato paste, canned boiled bamboo shoots, canned oranges, canned peaches and various other types of fruits and vegetables.
GreenStar has been operating for over 19 years. Through the application of science and technology in production, quality control and assurance, and business operations and management, GreenStar has focused on maintaining product and reputational excellence with a high standard of food quality. Key assets include a well established management team, modern production facilities, and a close partnership with local farmers.
GreenStar Agricultural Corp. is listed on the TSX Venture Exchange under the symbol "GRE".
For further information on GreenStar please visit our web site at www.greenstaragricultural.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Caution Regarding Forward-Looking Information:
Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements may use such words as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking information in this news release includes the statement that the Corporation's expectation on the timing for final closing of the Beichen acquisition, the Corporation's expectation that Beichen will continue its operations under its current name as a subsidiary of the Corporation, the Corporation's plan to expand Beichen facilities and to increase Beichen's tomato pulp production volume, management's plan to increase its current production facilities in Pucheng, Fujian, PRC , the increased production capacity volume expected by management, management's expectation on timing for completion of the expansion, management's plan to absorb Beichen's tomato pulp production and plan to sell excess pulp to third parties, management's plan for additional construction, expected new area of construction and expected timing for completion of the construction. This press release also includes future oriented financial information including the expected production volume of tomato pulp at Beichen, the expected increased production volume of tomato paste at the Corporation's Puchen facilities and the expected volume of Beichen's increased tomato pulp production to be absorbed by the Corporation, which are provided for the purpose of providing a more detailed disclosure on management's planned future expansion. These forward-looking statements involve a number of risks and uncertainties. Some of the factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking statements are risk of regulatory approval not being obtained, changes in: international, national and local business and economic conditions; political or economic instability in the Corporation's markets; competition; legislation and governmental regulation; and accounting policies and practices. The foregoing list of factors is not exhaustive. Please see the Corporation's annual MD&A dated April 25, 2013, available on www.sedar.com, for a more detailed description of the risk factors. The Corporation undertakes no obligation to update publicly or revise any forward-looking information, whether a result of new information, future results or otherwise, except as required by law.