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China Organic Agriculture Sells ErMaPao
Subsidiary for $8.7 Million
Oct 03, 2008
China Organic Agriculture, Inc. (OTCBB: CNOA), a growth-driven
agricultural products company, has sold its Jilin Songyuan City
ErMaPao Green Rice Limited ("ErMaPao") subsidiary for $8.7 million
to Bothven Investments Limited.
The ErMaPao segment had shown significant decreases in sales of both
green and organic rice since the beginning of 2008 leading to the
Board¡¯s decision to sell the business.
"The sale of ErMaPao occurred, in part, as a result of several
disappointing quarters of sales for green and organic rice,¡± said
Jinsong Li, Chief Executive Officer of China Organic. "The exit from
ErMaPao was priced at a discount compared to previous year¡¯s
earnings potential due to its precipitous decline in sales. Since we
were able to sell to an interested investment firm before profits
deteriorated further, we may now use the cash from this sale to make
future accretive acquisitions.¡±
As reflected in the Company¡¯s second quarter financials, sales in
the ErMaPao segment declined to $398,439 in second quarter of 2008,
as compared to $2.3 million in the comparable period of 2007. This
represents more than an 80% drop in year-over-year sales.
This sell-off coincides with the shift of the Company's primary
focus to agricultural trading opportunities and diversification into
numerous agricultural products besides rice.
China Organic¡¯s other major business segments will not be affected
by this sale. These segments include: Ankang Agriculture (Dalian)
Co., Ltd ("Ankang") and The Bellisimo Vineyard ("Bellisimo¡±). The
Ankang segment trades agricultural products such as rice and grain,
and generated an impressive $3.3 million in sales for the second
quarter of 2008. Bellisimo is an active vineyard located in Sonoma
Valley, California, and will be selling wine to Chinese consumers
once a distribution network has been established.
"Based on ErMaPao¡¯s poor performance under previous management, we
are lucky to sell at the price we did,¡± said Mr. Li. "I will be
detailing our vision for China Organic Agriculture in a strategic
initiatives outline that will be issued via press release in the
near future. Around that time, I will also issue guidance for the
fourth quarter 2008 that will reflect the sale of ErMaPao and the
approaching acquisition of Dalian Huiming.¡±
About China Organic Agriculture
China Organic Agriculture is an active trader of agricultural
products in China. The Company's high-growth business plan is
designed to enable it to capitalize effectively on China's
burgeoning economy and expanding class of consumers with the ability
to acquire upscale products. The Company has developed an extensive
distribution network throughout many of China's major cities,
including Beijing, Shanghai and Nanjing, and is positioned to
leverage those networks to establish broad distribution of a number
of agricultural, food and related premium products. The Company has
experienced significant growth since its inception in 2002 and has
implemented a number of strategic initiatives to expand sales and
revenues. For more information, please visit:
www.chinaorganicagriculture.com
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