China Premium Food Corp. (OTCBB:CHPF), formerly known as China Peregrine Food Corp., reported that it has closed a $1.5 million financing, in the form of convertible preferred stock at a fixed price. These funds represent the first of a series of investments that are planned and structured as investment warrants at various strike prices. The preferred and the warrants have been priced above the current market. Roy Warren, President & CEO of China Premium stated, “In my view, this financing will permit our enterprise to earn cash flow and reduce our burn rate without the need for additional funding.”
China Premium Food Corp. also reported net sales of US $5,664,661 at its 52%-owned Hangzhou Meilijian subsidiary, a 16% increase over last year. While continuing efforts of Hangzhou Meilijian to increase sales volume and introduce new products into its market area resulted in an increase in SG&A expenses and overall operating losses, those expenses decreased as a percentage of revenue in 1999. Management of China Premium reported that they believe this subsidiary to be moving toward profitability during the later part of 2000. Hangzhou Meilijian offers a full line of dairy products, including fresh milk, extended shelf-life juices, and extended shelf-life milk in cartons, in metropolitan Hangzhou, which is located about 180 miles southwest of Shanghai.
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As announced on March 31, the Company has proposed the restructuring of voting power at Hangzhou Meilijian that will enhance China Premium’s control over the activities of its joint venture. This modification would be accomplished through a capital contribution that would increase the percentage of registered capital attributed to the Company. Until this is effected, China Premium will continue to report its financial results on an equity basis. In line with this policy, China Premium has restated its 1998 results, so as to be consistent with its 1999 report.
As previously reported, China Premium ceased operations at its Shanghai joint venture at the end of last year, and has been in negotiations to structure licensing arrangements with principal dairies in China’s top ten cities to produce its proprietary and well-received Looney Tunes(TM) line of flavored milks and drinkable yogurt products. Other important recent developments in China Premium’s business model that move the Company further away from production towards its goal of becoming a major food distribution business in China include: an agreement in principle to acquire control of the operations of Mandarin Fine Foods Company of Beijing and Shanghai, the dominant distributor of premium food products to four- and five-star hotels throughout China; and Chinese government approval for the registration of a new wholly owned subsidiary in the Wai Gao Qiao “Free Trade zone” in Shanghai, for the development of an import/export and distribution business throughout China.
China Premium has an exclusive supply contract with U.S. based Lance, Inc. (Nasdaq:LNCE) for the export of crackers and snack foods to China. The Company plans to leverage this opportunity through its wholly owned food distribution subsidiary in Shanghai, located in the Wai Gao Qiao Free Trade Zone. China Premium has also formed Bravo! Foods, Inc., a wholly owned subsidiary, which will be utilized to advance the Company’s business strategy of promoting and distributing key branded products in the United States through strategic arrangements with local U.S. producers and manufacturers.
For more information visit our website: www.chinapremiumfood.com
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By GlobalDataLooney Tunes(TM), characters, names and all related indicia are trademarks of Warner Bros.(c)1999,2000
Safe Harbor Statement under the Private Litigation Reform Act of 1995: The statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including, but not limited to, risks associated with the uncertainty of future financial results, regulatory approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties as may be detailed in the Company’s filings with the Securities and Exchange Commission.
