Flour and noodle company New Dragon Asia has raised US$9.5m in gross proceeds by completing a private placement of preferred stock and warrants with investors.
Midsummer Investment is the lead institutional investor in the transaction and TN Capital Equities acts as the exclusive placement agent for the Chinese food company.
New Dragon Asia chief financial officer Peter Mak said: “A key component of the company’s expansion strategy is management’s ability to enhance its growth and profitability through accretive and complementary acquisitions.”
New Dragon issued shares of series B 7% convertible preferred stock, convertible to 5,937,500 shares of New Dragon class A common stock at a conversion price of US$1.60. Six-year warrants to purchase an aggregate of 2,968,750 shares of class A common stock at an exercise price of US$1.76 were issued to the investors.
“The completion of this second financing with Midsummer Investment will enable the company to continue this strategy. We are gratified by the continued support and confidence of our investors and look forward to further capitalizing on the significant opportunities in China,” added Mak.
New Dragon Asia mills, sells and distributes flour and related products, including instant noodles and soybean-derived products, throughout China.
After completing a US$6m private placement in July 2005, with Midsummer Investment as the lead investor, New Dragon purchased a soybean facility, added a new production line and – earlier this month – acquired Shandong Xinlongya Distribution as its sole distributor.