27th Aug 2010 08:35
Press Release |
27 August 2010 |
Sorbic International plc
("Sorbic" or the "Company")
Convertible Loan of £3.5 million
Trading Update
Sorbic International plc (AIM:SORB), the third largest sorbates producer in China, is pleased to announce that it has raised approximately £3.5 million (before expenses) through a placing of convertible loan notes ( the "Convertible Loan Notes").
Construction of the Company's new production facility in Ulanqab City, Inner Mongolia commenced in April 2010, and is expected to be completed later this year with the plant expected to be fully commissioned during the summer of 2011. The net proceeds of the Convertible Loan Notes will be used to fund the capital expenditure which will allow the Company to significantly increase production. The new site in Ulanqab City will double Sorbic's existing manufacturing capacity.
The Company has issued £3.17 million of Convertible Loan Notes to institutional and existing shareholders and the balance of approximately £300,000 will be issued, subject to shareholder approval, following the Company's AGM in early 2011, when requisite shareholder approval will be sought for further disapplication of statutory pre-emption rights under s570 of the Companies Act 2006. The total of approximately £3.5 million includes £0.53 million of existing shareholder loans (including accrued interest) that are held by Albany Capital Group Limited ("Albany") which are rolling into the Convertible Loan Notes.
Director's participation
John McLean has subscribed for £40,000 of the Convertible Loan Notes. John McLean is also a director and shareholder of Albany. As such he is deemed to be interested in 6,877,678 ordinary shares of 6 pence each in the capital of the Company ("Ordinary Shares") held by Albany, representing 20.6% of the existing issued share capital of the Company.
Trading Update
Sorbic remains profitable and cash generative. As announced at the interim results in June this year, the Company's profitability in the short-term will continue to be impacted by environmental factors such as power outages. However, the move to the Inner Mongolia site underpins Sorbic's growth prospects for the longer-term and Board is confident that the Company is well positioned to capitalise on the anticipated growth in both exports and the Chinese domestic market.
Key Terms of the Convertible Loan Notes
The Convertible Loan Notes are repayable after 30 months from issue and attract an interest rate of 10% per annum, payable half yearly. The Convertible Loan Notes are convertible at a rate of 32 pence per Ordinary Share and, in the event of early redemption, the noteholder is entitled to either a 10% premium or warrant coverage at 32 pence per Ordinary Share with no premium payable.
It is the Company's intention to apply for the Convertible Loan Notes to be quoted on PLUS Markets. This application will be made following publication of the report and accounts of Sorbic for the year ending 30 September 2010. The report and accounts are expected to be published by mid-December 2010.
Commenting, John McLean, Chairman of Sorbic International, said: "These additional funds place Sorbic in a very strong position to continue to grow the business and increase market share. Sorbic remains cash generative and is now well funded to expand its operations through its new site in Inner Mongolia. The new facility in Inner Mongolia will be key to driving growth, and this significant development will double the Company's production capacity. The long-term prospects for Sorbic therefore remain strong."
- Ends -
For further information: |
|
Sorbic International plc |
Tel: +44 (0)7768 031 454 |
John McLean, Chairman |
www.sorbicinternational.com |
FinnCap |
|
Geoff Nash / Ed Frisby / Simon Starr (broking) |
Tel: +44 (0) 20 7600 1658 |
Media enquiries:
Abchurch Communications |
|
Joanne Shears / Mark Dixon |
Tel: +44 (0)20 7398 7709 |
www.abchurch-group.com |
Notes to Editors: www.sorbicinternational.com
About Chahar Industrial Park
Chahar Industrial Park is located in Ulanqab City, Inner Mongolia, in the north of the Peoples Republic of China ("PRC") and is the traffic hub that links North China with its neighbour, Mongolia and the main land route for international trade from China to Mongolia, Russia and Europe. Ulanqab City has a total land area of 54.5 thousand square kilometres and a population of 2.73 million people and is a one hour to drive from Hohhot Baita Airport, which lies 130 kilometers east of Hohhot. Beijing is 300 kilometers (3 hour drive) to the south and Tianjin port is 400 kilometers away.
About Sorbic International plc
Sorbic International's principal activity is the production and sale of the food preservatives Sorbic Acid and Potassium Sorbate from its base in Linyi City, Shandong Province, Peoples Republic of China. Approximately half of Sorbic International's production is sold to overseas markets, across 46 countries and half into the Chinese domestic market.
Sorbic Acid is a naturally occurring organic compound that is used in all kinds of foods for its anti-decomposition and anti-fungus function and also in grains, medicines, cosmetics, toothpaste, tobacco, animal feed, latex, paper-manufacturing and pesticides. Potassium Sorbate is used to inhibit moulds and yeasts in many foods, such as cheese, wine, yogurt, dried meat, baked goods, cosmetics and pharmaceuticals.
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Sorbic International