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E-WIRE PRESS RELEASE E-WIRE PRESS RELEASE E-WIRE PRESS RELEASE |
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MAPLE LEAF REFORESTATION SIGNS AGREEMENT TO ACQUIRE
ALFALFA FEEDSTOCK COMPANY |
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CALGARY, ALBERTA, May. 14 -/E-Wire/-- Maple Leaf Reforestation Inc. (TSX-V: MPE) (the "Company" or "Maple Leaf"), a China-based reforestation company, today announced that it has entered into a binding agreement (the "Agreement") to acquire 100% of the shares of Funong Alfalfa Feedstock Supply Limited (the Vendor or "Funong"), a private Chinese company, for a total consideration of Rmb$1,000,000 (equivalent of Cdn$160,000) (the "Purchase Price"). Funong is located in China's northwestern province of Shanxi. The Agreement will make Maple Leaf the owner of all capital assets of Funong and all registered patents rights currently owned by the Vendor. Such patent rights include two patents relating to feedstock processing and two involving machinery. The Agreement also includes technology transfers, existing sales/marketing network, supply contracts and existing farm leasing agreements.
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Funong generated revenues of Rmb$4,500,000 (equivalent to Cdn$700,000) in 2007 and is expecting to grow its production in excess of 2,000 metric tonnes of alfalfa feedstock for the first six months of 2008. Maple Leaf anticipates that the acquisition of Funong will provide an immediate flow of cash revenues to help fund its Xinjiang operation.
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The Purchase Price is payable to the Vendor as follows: (i) 30% or Rmb$300,000 paid as down payment upon signing of the Agreement; and (ii) 70% or Rmb$700,000 payable upon closing by May 30, 2008.
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In addition to the foregoing, the transaction is subject to the following conditions: (i) that any and all Shareholder loans, advances, debts or other sums due to the Shareholders from Funong be cancelled; (ii) that the Shareholders execute Non-Competition Agreements in a form satisfactory to Maple Leaf; and (iii) that Maple Leaf is able to retain the services of Mr. Guo, Funong's General Manager, with an Employment Agreement that is satisfactory to Maple Leaf and Mr. Guo.
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Prior to entering into the Agreement Maple Leaf engaged HingHua Public Accountants Limited to conduct an appraisal of Funong's operations. Based on the results of this appraisal Maple Leaf's Management feels as though the acquisition of Funong is being made at a very reasonable and attractive price.
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"We are very excited about the acquisition of Funong Alfalfa Feedstock Supply Limited as this strategically complements our Xinjiang Yellowhorn Trees project. Beyond the fact that the Funong acquisition will generate immediate cash flow, Maple Leaf will also benefit through the vertical integration of its operations into the larger Xinjiang Project, providing for processing and production of alfalfa crops alongside the Yellowhorn trees which grow symbiotically together," explained Raymond Lai, Chairman, President & CEO of Maple Leaf.
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The Xinjiang Yellowhorn Trees Project (the "Xinjiang project") will involve the cultivation of alfalfa in between the rows of Yellowhorn trees which protect against excessive soil erosion and provide a secondary revenue stream, as once it is harvested the alfalfa is dried into grass feed for livestock. Alfalfa plants typically have a lifespan of three to twelve years, grow to a height of up to 1 metre and they spread a deep root system that can stretch over 4 metres per plant making it very resilient and resistent to drought. Like other legumes, its root nodules contain a bacteria called Sinorhizobium Meliloti that have the ability to 'fix nitrogen' and produce a high-protein plant regardless of available levels of nitrogen present in the soil. Its nitrogen-fixing abilities boost nitrogen content in the alfalfa plants thus making it efficient and desirable for feedstock. Widely grown throughout the world as forage for cattle, alfalfa is most often harvested as hay but can also be made into silage or grazed, or fed as greenchop. Alfalfa has the highest feeding value of all common hay crops; therefore, it is used less frequently as pasture. In optimal soil conditions, alfalfa is the highest yielding forage plant available.
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"Increasing demand in recent years for beef and mutton in China is the largest driver of the rising demand for grass feedstock and grassland in China. Experts have said that China's fledging grass industry has tremendous upside potential. In China, where indiscriminate grassland grazing is discouraged, the annual requirement for dried grass products for animal feedstock is strong and rising; currently amounting to approximately 3 to 4 million tonnes annually. Supply of such grass products is filling only about 10% of the actual demand, or approximately 300,000 tonnes, thus presenting a ready market to sell the alfalfa grass feedstock in China. It is Maple Leaf's plan to leverage its existing nursery business infrastructure and realize rewards from this viable market opportunity in grass feedstock products," added Mr. Lai.
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Pending local regulatory approval, the Agreement is scheduled to close by May 30, 2008.
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About Funong Alfalfa Feedstock Supply Limited
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Funong was established in 2004 as an alfalfa based feedstock supplier in northern China. The company currently owns three production lines each capable of generating between 1,500 to 2,000 metric tonnes of dried feedstock (in the form of compact pellets) per year. Products from Funong's patented processing lines are unique and the company faces no direct competition from other feedstock suppliers within China. Its traditional clients are the cattle and goat ranchers as well as dairy cow farmers in the northwestern region. Funong is now set to expand distribution of its patented products into other regions of China, especially the southern provinces of Guangdong and Fujian where the market for dried hay cubes and feedstock pellets is emerging and therefore presents an enormous opportunity. Funong owns four patent rights: two patents relating to dry feedstock processing and two more involving machinery. Funong's planned production for 2008 is about 4,500 metric tonnes, with hopes of more than doubling processing capacity to 10,000 metric tonnes in two years time.
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About Maple Leaf Reforestation Inc.
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Maple Leaf is a Canadian company operating a large-scale forest nursery whose primary focus is growing value-added tree seedlings in addition to providing landscaping and nursery products in China. Reforestation has been identified as a critical strategy to help manage China's troubling environmental issues, namely pollution and desertification. Maple Leaf currently has over 6 million varieties of seedlings under cultivation at its nursery facility that includes a 110,000-square foot greenhouse located in Liang Cheng, Inner Mongolia, China. Maple Leaf is a wholly-owned foreign enterprise ("WOFE"), which allows Maple Leaf to control 100% of the direction and operations of the company in China while permitting the cash generated from operations in China to flow back to Canada. For further information regarding Maple Leaf Reforestation Inc., visit www.mlreforestation.com
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Should you wish to receive Company news via email, please email catarina@chfir.com and specify "Maple Leaf Reforestation Inc." in the subject line or contact the Company directly.
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The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
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Certain statements in this news release including (i) statements that may contain words such as "anticipate", "could", "expect", "seek", "may" "intend", "will", "believe", "should", "project", "forecast", "plan" and similar expressions, including the negatives thereof, (ii) statements that are based on current expectations and estimates about the markets in which Maple Leaf operates and (iii) statements of belief, intentions and expectations about developments, results and events that will or may occur in the future, constitute "forward-looking statements" and are based on certain assumptions and analysis made by Maple Leaf. Forward-looking statements in this news release include, but are not limited to, statements with respect to future capital expenditures, including the amount, nature and timing thereof; other development trends within the China's seedling industry; business strategy; expansion and growth of Maple Leaf's business and operations and other such matters. Such forward-looking statements are subject to important risks and uncertainties, which are difficult to predict and that may affect Maple Leaf's operations, including, but are not limited to: the impact of general economic conditions; industry conditions; government and regulatory developments; seedling product supply and demand; competition; and Maple Leaf's ability to attract and retain qualified personnel. Maple Leaf's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do transpire or occur, what benefits Maple Leaf will derive there from. Subject to applicable law, Maple Leaf disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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All forward-looking statements contained in this document are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in other disclosure documents of Maple Leaf which have been filed with Canadian provincial securities commissions and are available on www.sedar.com.
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/SOURCE:
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Maple Leaf Reforestation Inc. |
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05-14-2008 |
/CONTACT:
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Maple Leaf Reforestation Inc.
Raymond Lai, Chairman, President & CEO
Tel: +1 (403) 668-7560
Fax: +1 (403) 250-2534
E-mail: rlai@mlreforestation.com
CHF Investor Relations - Toronto
Catarina Cerqueira, Associate Account Manager
Tel: +1 (416) 868-1079 ext. 251
Email: catarina@chfir.com
Christopher Haldane, Account Manager
Tel: +1 (416) 868-1079 ext. 237
Email: chris@chfir.com
CHF Investor Relations - Shanghai
Tel: +86 (0)21 28909034 |
| /WEB SITE: |
http://www.mlreforestation.com
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