September 3, 2003
China's Global Bio-Chem to Increase Share in both Domestic and Overseas Lysine Market
In a press release dated 19th August 2003, independent shareholders of Global Bio-chem Technology Group Company Limited announced that they have approved the transaction regarding the establishment of Changchun Baocheng Bio-chem Development Co., Ltd., a joint venture company (the "JVC") for the production and sale of various types of protein lysine and compound amino acids in the People's Republic of China.
"The establishment of Baocheng Bio-chem will enable us to achieve larger capacity, greater economies of scale for biochemical products and lower cost of production of protein lysine and compound amino acids. The setting-up of the JVC brings in extra production capacity and diversifies our downstream biochemical product portfolio, which is congruent with our long-term corporate strategy. This will not only enable us to accelerate our penetration into the European market, but also allow us to capture a larger share of the growing domestic market. With the additional production capacity derived from the establishment of Baocheng Bio-chem, we will become one of the top 5 lysine producers in the world," said Mr Liu Xiaoming, the Chairman of Global Bio-chem.
According to the Joint Venture Agreement and Supplemental entered into between the Global Bio-chem Group and Changchun Dahceng Industrial Company Limited ("Dacheng Industrial") on July17 2003, the total investment of Baocheng Bio-chem will be US$45 million, with US$15 million in the form of capital injection by shareholders and US$30 million of borrowings which would be partly satisfied by an interest-subsidized bank loan of RMB150 million procured by Dacheng Industrial, and the balance to be satisfied by other means. The bank loan will be used for the purchase of fixed assets and for general working capital.
Baocheng Bio-chem's plant will be located in Global Bio-chem's production base in Changchun, China, with an annual production capacity of approximately 40,000 metric tons of protein lysine and 20,000 metric tons of compound amino acids. Together with the joint venture facility, Global Bio-chem's total lysine production capacity will be doubled to 80,000 metric tons per annum.
Dacheng Industrial is a strategic partner of the Group in China and is currently a shareholder of certain indirect non-wholly owned subsidiaries within the Group in China. With a listing on the Main Board of the Stock Exchange of Hong Kong Limited, Global Bio-chem is principally engaged in the manufacture, research and development of corn based biochemical products in China. Its products are sold in China and other countries in Asia and Europe.
Headquartered in Hong Kong and with its production facilities based in Changchun, Jilin province, the Group is the largest lysine producer and largest vertically integrated corn based biochemical product manufacturer in China, with an annual corn processing capacity of 1,200,000 metric tons and an annual lysine production capacity of 40,000 metric tons at present, and approximately 1,400 employees.