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Sino Agro Food Inc. Announces Important Milestones in Strategic Plan

GUANGZHOU, China, April 24, 2015 /PRNewswire/ — Sino Agro Food, Inc. (OTCQB: SIAF) — In late September 2014, Sino Agro Food, Inc. and Euro China Capital AB (“ECAB”) initiated a strategic plan designed to complement operational performance with corporate steps to unlock shareholder value. Progress in the form of a “broad strategic plan” was announced in late December 2014. The Company is now ready to provide the following update:

  • Long term vision: Sino Agro Food’s long-term vision is to become a leading sustainable aquaculture company focused on organically farmed fish and prawns. In this process, other businesses will be divested, either through separate listings or M&A.
  • Listing of the Company’s shares on the Oslo Stock Exchange: The Company has together with its newly appointed financial advisor Arctic Securities set an objective to list its common equity on the Oslo Stock Exchange as soon as practicable.
  • New Chief Financial Officer: Mr. Bertil Tiusanen has been appointed as group CFO. Mr. Tuisanen has previously been CFO at large Swedish corporations such as Vattenfall AB and Coop AB. Mr. Tiusanen is currently employed as advisor to the Norwegian Government and will start as full-time CFO of Sino Agro Food on May 1st 2015.
  • New Nordic Investor Relations: Box Communications has been engaged to handle the Company’s Nordic IR activities. Mr. Tomas Oqvist, previously top-ranked Swedish equity analyst, will act as Nordic IR Manager with special responsibility for institutional investors.

Chairman and CEO Solomon Lee commented, “During the last few months, we have worked intensively together with Euro China Capital in order to execute on our strategic plan to convert operational performance into shareholder value. I am convinced that our newly formulated long-term vision to focus on sustainable aquaculture is right for the Company. With today’s management appointments, I am confident that we have the right team in place to continue to execute on our plan, for the benefit of the Company, our employees and our shareholders. I am particularly happy about the recruitment of our new CFO Bertil Tiusanen, whom I am certain will add valuable expertise and experience to the Company when it comes to financing matters.”

Sino Agro Food outlines its vision and defines a clear roadmap for the next 5 years
Sino Agro Food’s vision is to become a leading aquaculture company focusing on organically farmed fish and prawns. In 2014 the Company’s aquaculture operations[1] generated total revenues of USD 229 million and gross profit of nearly USD 70 million. The Company’s aquaculture operations have substantial growth opportunities in the years ahead, not least through the Zhongshan Prawn Project where the production of organic prawns using the Company’s proven proprietary recirculating aquaculture system technology will be scaled up considerably. The first two thousand metric tonnes of annual production capacity[2] was installed earlier this year and production will begin in the early summer.

In addition to its aquaculture operations, Sino Agro Food owns stakes in several other non-aquaculture businesses that are all active within the organic food value chain. Under Sino Agro Food’s leadership, many of these operations have already been developed into highly profitable and substantially growing businesses.

  • Qinghai Integrated Cattle Farm Division (SJAP): SJAP generated revenues of USD 102 million and gross profit of USD 31 million in 2014. Sino Agro Food’s equity ownership of SJAP is 45%.
  • Cattle Farm Development Division[3] (MEIJI): MEIJI generated revenues of USD 33 million and gross profit of USD 2 million in 2014. Sino Agro Food’s equity ownership of MEIJI is 100%.
  • HU Plantation Division (JHST): JHST generated revenues of USD 11 million and gross profit of USD 8 million in 2014. Sino Agro Food’s equity ownership of JHST is 75%.
  • Hunan Organic Fertilizer Division (HSA): HSA generated revenues of USD 20 million and gross profit of USD 9 million in 2014. Sino Agro Food’s proportionate equity ownership of HSA amounts to 48.5%.

In order to fulfill its vision of becoming a leading sustainable aquaculture company, while at the same time realizing the full potential in each of its non-aquaculture businesses, the Management and the Board of Directors have also defined a clear roadmap for each of its separate business divisions for the next five years. This includes actively pursuing value enhancing merger & acquisition (M&A) opportunities, separate public listings and/or straight trade sales of various business units. As previously announced, the company has already begun preparations regarding M&A opportunities and a potential separate public listing of SJAP.

Intention to list Sino Agro Food’s shares on the Oslo Stock Exchange
After careful consideration, the Company has concluded that the Oslo Stock Exchange (OSE) is the most suitable exchange for Sino Agro Food’s shares. The Oslo Stock Exchange is recognized as the largest stock exchange for aquaculture and seafood companies globally and Sino Agro Food believes that the Company will benefit from the visibility that it will receive from an investment community with experience and in depth aquaculture knowledge.

The Company has engaged Arctic Securities as its financial advisor in preparation for a public market listing on the Oslo Stock Exchange. Arctic Securities is a leading financial institution in Norway with extensive expertise in aquaculture, including a top ranked equity research team.
Based on advice provided by Arctic Securities, it is the Company’s objective to list its common equity on the Oslo Stock Exchange as soon as practicable. In conjunction with its listing on the Oslo Stock Exchange, the Company will expand and strengthen its Board of Directors.

Appointment of Bertil Tiusanen as new Chief Financial Officer
Bertil Tiusanen is joining the company as the new Group CFO and responsible for Business Development as of May 1st, 2015. Following Mr. Tiusanen’s appointment, Miss Olivia Lai will act as our group’s Chief Corporate Affairs Officer and Deputy CFO.

Mr. Tiusanen’s career credentials include CFO positions at several multi-billion U.S. dollar companies in Sweden, where he has spearheaded project financings, negotiated corporate wide bond issues and obtained dual exchange listings on Nasdaq US and Tokyo Stock Exchange. More recently, he has been an advisor to the Norwegian government.

Mr. Tiusanen observed, “After having spent a significant amount of time familiarizing myself with the Company, I am highly impressed with the operations that Mr. Solomon Lee and his team have built up in a relatively short period of time. I am delighted to join the Company at this stage, when the proof of concept stage is completed and ready to be scaled up to a new level, particularly with regards to its unique organic prawn production. I hope that my experience and relations in the financial sector will contribute to the Company’s ability to capture these growth opportunities in an efficient and shareholder friendly manner.”

Appointment of Tomas Oqvist as Nordic IR
Box Communications has been engaged to strengthen the existing IR team with extensive expertise in financial analysis and Nordic region specific communication. Tomas Oqvist, previously top-ranked Swedish equity analyst and founding partner of Box Communications, will act as Nordic IR Manager with special responsibility for institutional investors. Mr. Oqvist will be located in Stockholm.

Corporate IR representative Peter Grossman commented, “Tomas and I will coordinate the Company’s Investor Relations activities going forward. With the initiatives that the Company has taken, I have confidence that Sino Agro Food will continue to broaden its investor base, including increased institutional investor interest both in North America and in Europe.

Mr. Fredrik Danielsson, Euro China Capital commented: “In association with the first strategy meeting with the company, a number of parallel processes were initiated in the areas covered by the “broad strategic plan” to create shareholder value that was announced at the end of last year. I am pleased that some of these processes now have been converted into concrete results. The appointments and actions announced today are important milestones in the transition of Sino Agro Food to a company with a more normalized ability to finance itself, not least with regards to debt financing.”

About Arctic Securities AS
Arctic Securities is an employee owned investment bank and is independent of all financial institutions. Arctic Securities’ absolute commitment to integrity, quality and independent research, focusing on competence, discretion and rapid execution, are Arctic Securities’ core competitive advantages. Arctic Securities has unparalleled corporate finance experience in the Norwegian market.

About Bertil Tiusanen
Mr Tiusanen, age 66, has a background as CFO in a number of large Swedish corporations including Vattenfall, a major European energy company with annual revenues of USD 19 billion and Coop AB, one of the largest Nordic grocery retailers with annual revenues of USD 4 billion. He has served on the board of several Swedish and Norwegian companies and is currently working full time as an advisor to the Norwegian Government.

About Box Communications
Box Communications is a Stockholm-based team of communications experts with previous careers in media, finance, business and politics. Mr. Oqvist, age 51, is a founding partner of Box Communications and has a solid background in strategic financial communications. Prior to working as an investor relations and communications consultant, Mr. Oqvist has more than 15 years experience in the financial markets, with equity analyst positions at Carnegie and at Alfred Berg. He was a top ranked analyst in Sweden for several years. He has advised major Swedish, European and American institutions trading in Nordic equities and also participated in several IPO’s and M&A transactions.


 

Update on Sino Agro Food, Inc. and Euro China Capital AB Strategic Plan

GUANGZHOU, China– Sino Agro Food, Inc. (OTC QB: SIAF) is an integrated, diversified agriculture technology and organic food company (“the Company”) with principal operations as primary producer, processor, and marketer in the People’s Republic of China (“PRC”).

A meeting with Euro China Capital AB (“ECAB”) and Sino Agro Food, Inc. (“SIAF”) was held on December 15 in Guangzhou to follow up on the strategic plan to create shareholder value that was agreed in Stockholm in late September.

Here is an update of the progress:

Qinghai Sanjiang A Power Agriculture Co., Ltd.

The Company has met with global Tier-1 investment banks in Hong Kong in order to find a suitable advisor regarding the planned listing or merger and acquisition activity of the Company’s integrated cattle operations in Xining, “SJAP.” Interest has been strong. The Company concludes that peer group multiples for similar companies listed on the Hong Kong stock exchange is very encouraging. This strengthens the company’s view that structural changes can unlock great shareholder value. As part of this process, the company is also in discussion with a top-4 CPA firm to become auditor of SJAP.

Due diligence reports made as preparation for potential new listing

For some time the Company has been evaluating a new, more appropriate listing of the SIAF shares. As a preparation, an extensive legal due diligence (“DD”) report has been made by Delphi on the group. Including law firms in China, a total of four law firms have assisted Delphi. With regards to SJAP and as part of the plans for this business unit mentioned above, a separate legal DD has been made by King & Wood Mallison. Also, Deloitte has conducted a financial DD for SJAP. The Company is contractually from making any these three DD reports available to the public. However, the Company can report that the three DD reports are all satisfactory with some minor remarks on SJAP that are currently being amended. However, the Company is able to release the underlying filings made to the Chinese “State Administration for Industry & Commerce of the People’s Republic of China ” (“SAIC”). These have been important parts of the material used for the three DD reports. As of today, the SAIC filings are accessible on the Company’s web site.

Stockholm Office

The staffing of the Stockholm office is on-going, and the Company is currently interviewing candidates that it believes would add significant experience and know-how to the group.

Dividend

Being a producer of organic food in China for the Chinese population, demand for the company’s products is soaring. The company has consequently invested heavily in production capacity across all its business lines over the past years resulting in negative cash flow, despite significant reported profits. However, as shown in the financial reports, the underlying cash flow generation is also improving at a steady pace. Together, the Company and ECAB have analyzed the forward cash flows, and decided to start paying an annual cash dividend based on the net profit to SIAF Inc. and subsidiaries, beginning with the dividend based on 2015′s full year report, to be paid in 2016. The exact dividend policy will be announced during 2015.

The preferred F series shares (dividend) of $3.40 (totalling $3,146,063) will be paid in full on May 30, 2015. Payments will also include 10% retroactive interest.

Commented Fredrik Danielsson, Managing Partner of Euro China Capital AB: “Since the strategy meeting in September, ECAB has continued to work on a broad range of improvements on the areas referred to in earlier announcements. Amongst other things, I have made two week-long trips to mainland China and Hong Kong with the purpose of further updating myself on SIAF’s operational progress, and to meet investment banks and other financial advisors. To conclude, I feel more confident than ever about the Company. I expect that the work initiated after the convertible note was announced in September will gradually start to generate significant benefits during the first half of 2015.”

SIAF CEO Solomon Lee remarked, “Having worked closely together over the last month, I am delighted to conclude that Euro China Capital AB and Fredrik Danielsson really have the skills and relations to lift the company to a completely new level, bringing experience and expertise in areas we have been lacking. I am convinced that our complementary skills will enable the company to deliver on the plan to enhance shareholder value.”


 

Sino Agro Food Closed US $25 Million Convertible Note Funding

GUANGZHOU, China– Sino Agro Food, Inc. (OTCQB: SIAF.OB) is an integrated, diversified agriculture technology and organic food company (“the Company”) with principal operations inthe People’s Republic of China.

The Company is pleased to announce that it has closed a net US $24,975,000 convertible note funding with Euro China Capital AB (“ECAB”), a Nordic investment house, on the 29th ofAugust, 2014.

The convertible note carries an interest rate of 10.5% p.a. fixed, a term of 5½ years, and a conversion price of US $1.00. The principal amount of the note is $33.3M.

The note is junior to any existing or new debt and does not restrict the Company from adding any amount of new debt regardless of form, and neither does the note restrict the Company from any cash nor non-cash dividends to shareholders. The basis for any subsidiary spin-off is set outin detail in the agreement.

The Company has covenanted and committed to discontinue the issuance of equity to our tradesuppliers and similar except for those that have been agreed to prior to the signing of the convertible notes agreement. The Company will settle all remaining commitments of this kind during the third quarter, resulting in a total number of outstanding shares of 170m.

Proceeds of the note will be used to complete the Company’s existing 5-year plan. The Company will meet with Euro China Capital in Stockholm in September to agree on a plan on how to best create shareholder value.

Sino Agro Food CEO Solomon Lee commented, “I am very pleased to announce the agreement of this US $25M convertible note funding. This is a major milestone in Sino Agro Food’s corporate strategy. We have now secured the necessary funding to successfully complete the 5-year investment plan we initiated in 2010, and gained a partner in Euro China Capital with broad and valuable experience in the capital markets that will help us to create better shareholder value.”

Euro China Capital AB’s Managing Partner Fredrik Danielsson commented, “We have conducted extensive due diligence on Sino Agro Food over the past two years and are impressedby the operations that Mr Lee and his team have managed to develop. However, it is also fair to say that we have been less impressed by the company’s ability to cost efficiently fund its impressive growth with the help of capital markets. I believe shareholders of the company have found it painfully frustrating to see a constant dilution of the share count at ever more depressed valuation multiples as a means of financing the company’s growth ambitions. As part of this convertible bond, Sino Agro Food has undertaken a commitment to cease the issuance of newshares as a means to pay suppliers and similar.

Our ambition is that the equity will never again be used as currency until it has reached a value that to some degree reflects the fundamental value of the company. With this foundation and Mr. Lee’s commitment to work with Euro China Capital now in place, we are confident that we have established a platform from which Sino AgroFood has the ability to transform its operational success into value for all its shareholders. Weare excited to get involved and hope to be able to present our first initiatives already before the announcement of the Company’s next quarterly report.”

Complete Terms & Conditions of the convertible note can be found on the Company’s website and the 8-K filing of this press release on EDGAR.

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