18 Aug 2011 07:00
18 August 2011
Origo Partners PLC
Follow-on Investment in China Rice Ltd
Origo Partners Plc ("Origo") is pleased to announce a follow-on investment of up to US$10 million in China Rice Ltd ("China Rice" or "the Company"), an existing Origo portfolio company.
In March this year, Origo invested US$13 million in China Rice, a Jilin-based rice processing business serving the fast growing Chinese market for safe, healthy, premium rice products - in particular Japonica rice - grown primarily in northern China.
The price of rice in general - and especially Japonica rice - has increased steadily in China during the course of 2011 and is expected to rise further in the second half of 2011. The combination of shorter than expected supply and higher demand for premium rice varieties occurring amidst general inflationary pressures and strong consumer led GDP growth in China, is providing a favorable market environment for China Rice.
In conjunction with the original investment in China Rice preferred stock, Origo was granted the option to invest an additional US$10 million in the form of notes convertible into equity subject to certain financial performance conditions being met. Origo has now entered into definitive agreements to affect the subscription of the loans and advanced the first US$5 million to the Company.
China Rice will use the proceeds of the financing as procurement funding to lock in supplies of paddy-rice at favourable prices in preparation for the high season (November to March), which Origo expects will significantly boost the Company's financial performance in 2012.
Commenting on the announcement, Chris Rynning, Chief Executive Officer of Origo, said:
"Since our initial investment in March, the performance of China Rice has exceeded our expectations, in particular in terms of strengthening its management team and preparing the business for further growth. Meanwhile, the procurement price of Japonica rice has risen by almost 15 per cent year on year, and we expect prices to continue to increase significantly by the end of the year. Accordingly, there now exists a clear opportunity to secure paddy-rice at substantial discounts to year end prices. This cash injection will enable China Rice to capitalise on this opportunity while continuing to ramp up production."
For further information about Origo please visit www.origoplc.com or contact:
Origo Partners plc Chris Rynning (chris@origoplc.com) Niklas Ponnert (niklas@origoplc.com) | +86 1390 124 6417
+86 1351 106 1672 |
Nominated Adviser and Broker Liberum Capital Limited Simon Atkinson/ Richard Bootle | +44 (0)20 3100 2222 |
Public Relations: Aura Financial Nina Legge / Mike Bartlett | +44 (0)20 7321 0000 |
Notes to editors:
Origo Partners:
Origo is an AIM-listed private equity investor and strategic consultancy business which provides its shareholders with exposure to China-linked investment opportunities.
Origo has a significant portfolio of investments in a range of industrial sectors, including metals and mining, agriculture, renewable energy/clean tech and technology, telecom and media.
Origo invests directly in high growth Chinese companies as well as in companies based around the world with significant exposure to Chinese export markets.
China Rice:
China Rice is one of China's leading privately held rice processing and distribution groups with an annual production capacity of approximately 300,000 tons. The Company maintains a strong resource and procurement base in the north eastern province of Jilin, one of China's largest rice producing belts. Jilin province is a key area for the production of japonica rice, a variety increasingly favored by Chinese consumers as a healthier and better tasting option compared to alternative varieties grown in southern China. China Rice's management team has significant experience and expertise in rice processing and production and a well-established sales network supplying companies, government agencies, wholesalers and supermarkets.