GreenStar Agricultural Corp. Completes Beichen Acquisition and
Announces Expansion Plans at Pucheng Production Facilities
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.
GreenStar Agricultural CorporationRobert Macdonald(416) 849
3858rgam36@gmail.comwww.greenstaragricultural.comInvestor Cubed
Inc.(647) 258-3311 or (888) 258-3323info@investor3.ca
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