London-listed China Food Co. is to issue a convertible loan note of up to GBP1.5m, the company said amid an upbeat trading statement today (16 June).
The note will have a conversion price of 50p over a two year period and a coupon of 8% per annum.
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In the update, the Chinese manufacturer and distributor of cooking and dipping sauces said the note “has already been substantially subscribed by new and existing shareholders, including funds managed by Amati Global Investors Limited and Albany Capital Group Ltd, amounting to GBP1.03m”.
“The net proceeds of the placing will be used for working capital purposes,” the firm added.
The sauce company went on to say that trading this year has been in line with expectations and significantly better than last year. It added that margins for both divisions were showing continued improvement over 2009.
“The recovery of the feed business is dampened by the current depressed prices of pork and poultry. Nevertheless, the group expects the recovery to continue for the full year 2010,” it said.
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By GlobalDataChina Food opened a soya sauce factory in Shou Guang City in May.
Today (16 June), the UK-listed firm said that actual production is scheduled to start on 1 July. The first phase of expansion will increase the company’s condiments production by 50% of its current capacity. It is proposed that in due course there will be two further phases, adding capacity of 50,000 tonnes each.
The statement also said that the company is in closing stages of securing a bank facility to give China Food the ability to scale up production and fill further silos.
The additional capacity from the company’s new facility will be used to penetrate new geographic markets, such as the neighbouring provinces to Shandong of Henan, Hebei, Anhui and Jiangsu.
John McLean, chairman of China Food, said: “For the last five months the company has been focused on completing construction of the new facility; the focus now shifts to developing the business, penetrating new markets and driving growth in sales. The board is pleased with the progress that has been made since the new facility opened in May 2010, and we are working towards the date for the first shipment in early autumn 2010.”
