Beijing, China
July 28, 2008
Origin Agritech Limited
(NASDAQ: SEED - News) (“Origin” or the “Company”) today
announced that it entered into a Notes Repurchase Agreement (the
“Agreement”) on July 28, 2008 with Citadel Equity Fund Ltd.
(“Citadel”) providing for the repurchase by the Company from
Citadel of a portion of the Company’s outstanding 1% Guaranteed
Senior Secured Convertible Notes due 2012 (the “Notes”).
The Company issued the Notes to Citadel in an aggregate
principal amount of US$40 million. Pursuant to the Agreement,
the Company will repurchase from Citadel the Notes in an
aggregate principal amount of US$18.7 million for a total
repurchase price of US$20.0 million payable in cash. The Note
repurchase will be completed in two tranches. The Company
expects to purchase $14.0 million of the Notes on July 28, 2008,
and $4.7 million of the Notes by the end of 2008. Upon the
completion of the repurchases, respectively, the repurchased
Notes will be cancelled. The Company intends to finance the
repurchase of the Notes from its cash resources. As a result of
lower interest expense, the Company expects the repurchase to be
accretive to net earnings by approximately $0.01 per diluted
share in fiscal 2008 and $0.06 per diluted share in fiscal 2009,
on a U.S. GAAP basis.
In connection with the Notes repurchase, Citadel has agreed to
waive past noncompliance by the Company through June 30, 2008
under certain financial covenants, and to amend a covenant,
contained in the indenture for the Notes. Citadel has not agreed
to waive any future defaults under the Note indenture. Investors
should refer to the Form 6-K furnished by the Company to the
Securities and Exchange Commission today for additional
information regarding the Notes repurchase transaction and the
status of the Company's past and future compliance with the
covenants contained in the Note indenture. A copy of the Notes
Repurchase Agreement is included as an exhibit to the Form 6-K,
and a copy of the Note indenture is filed as an exhibit to the
Company’s Annual Report on Form 20-F for its fiscal year ended
September 30, 2007 filed with the Securities and Exchange
Commission.
This Note repurchase provides the Company with the opportunity
to increase equity shareholder value while continuing to
streamline its operations and fund its GMO development through
internally generated resources.
About Origin
Founded in 1997 and headquartered in Beijing, Origin Agritech
Limited (NASDAQ: SEED - News) is one of China’s leading,
vertically-integrated agricultural technology company
specializing in agri-biotech research, development and
production to supply the growing populations of China. Origin
develops, grows, processes, and markets crop seeds to farmers
throughout China and parts of Southeast Asia via a network of
approximately 3,800 first-level distributors and 65,000
second-level distributors and retailers. The hybrid seed
industry is estimated at US$2 billion and that is expected to
double by 2010. The Company currently operates facilities in 30
of China’s 32 provinces as well as Beijing. Since Origin
launched its first entirely internally developed seed in 2003,
the Company has developed and commercialized an internally
developed proprietary seed portfolio of twelve corn hybrids,
twelve rice hybrids and two canola hybrids as of 2007. For
further information, please log on
www.originagritech.com.
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