Jan 7 2010
China Medicine Corporation
(OTC Bulletin Board: CHME) ("China Medicine" or "the Company"), primarily a
leading distributor and a developer of Western pharmaceuticals, traditional
Chinese medicines ("TCM"), and other nutriceuticals today announced that it
has entered into a Stock Subscription Agreement for an equity private
placement (the "Subscription Agreement") with One Equity Partners ("OEP"), the
global private equity investment arm of JPMorgan Chase & Co.
China Medicine is OEP's first investment in Greater China and reflects the
firm's commitment to back aspirational management teams to accelerate the
growth of their businesses.
Subject to certain closing conditions, OEP has agreed to purchase
4,000,000 of the Company's common shares at $3.00 per share and 1,920,000 of
the Company's redeemable convertible preferred shares at $30 per share, for an
aggregate purchase price of $69.6 million. Each redeemable convertible
preferred share is initially convertible into ten common shares. At closing,
the Company will receive $12 million in proceeds while the remaining $57.6
million in proceeds will be placed in escrow until released to fund additional
capital expenditures and acquisition projects.
China Medicine expects to use the net proceeds of the financing for
capital expenditures relating to its recent acquisition of LifeTech
Pharmaceuticals Co. Ltd. ("LifeTech"), for working capital purposes, and for
future expansion and/or acquisition projects subject to approval from OEP and
the Company's board of directors.
"We are delighted by OEP's endorsement of our business strategy as we move
higher in the pharmaceutical value chain by combining manufacturing
capabilities with our nationwide distribution network and exciting new
products," said Mr. Senshan Yang, Chairman and CEO of China Medicine. "These
include our proprietary recombinant Aflatoxin Detoxifizyme (rADTZ), a novel
product for removing aflatoxins found in food and animal feed that we believe
holds significant potential for future growth. Going forward, our strategy is
to focus on developing and building brand recognition nationally to enhance
the value of our enterprise."
Ryan Shih, resident partner for OEP based in Hong Kong, said, "OEP is very
impressed with China Medicine's management team. With the LifeTech acquisition,
the Company is transforming into a vertically integrated distributor and
developer of compelling products with attractive growth potential. The Company
has established a leading position in China's fast-growing pharmaceutical
market, and we believe that the management team has the vision to capitalize
on an extensive distribution network for medicines as well as develop
innovative new products including new medicines and other products such as
rADTZ."
Under the Subscription Agreement, the Company has set a target of
achieving $25 million in earnings before taxes, interests, depreciation and
amortization (EBITDA) assuming that the Company completes certain other
acquisitions in fiscal 2010. If such acquisitions are not completed during
fiscal year 2010, then the Company will target a correspondingly lower EBITDA.
The common shares, including the common shares issuable upon the
conversion of the redeemable convertible preferred shares that will be offered
in the private placement have not been registered under the Securities Act of
1933, as amended, or state securities laws, and may not be offered or sold in
the United States without being registered with the Securities and Exchange
Commission ("SEC") or through an applicable exemption from SEC registration
requirements.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of, any of the
securities referred to in this news release in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
SOURCE China Medicine Corporation