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AgFeed to Acquire Commercal Hog Farms

by 5m Editor
25 August 2008, at 1:11pm

CHINA - AgFeed Industries, Inc., the largest commercial hog producer and the largest premix feed company in China, today announced that the Company has reached agreements to acquire 4 producing commercial hog farms in South China.

AgFeed expects these acquisitions to close in early September. All of the Company's acquired hog farms are immediately accretive to earnings. AgFeed is also in discussions with multiple other farms as potential acquisition targets.

AgFeed has sufficient cash on hand, a strong balance sheet as well as strong cash flows from operations to fund its current acquisition plans in 2008. In addition to these four farms, AgFeed intends to acquire no less than 5 to 10 additional producing hog farms before the end of 2008, to be funded from current cash flows. All of its hog farm acquisitions are immediately accretive to earnings.

Positive Business Outlook, Affirms 2008 Guidance

AgFeed currently experiences favorable market environment in its business -- declining raw materials input costs and greater operating efficiencies from operations. AgFeed affirms previously reported 2008 adjusted net earnings per share guidance of between $1.08 and $1.20 per share. AgFeed's recent appointment of a US hog industry executive Gerry Daignault as Chief Operating Officer adds depth to AgFeed's already strong management team.

Gerry Daignault, AgFeed's Chief Operating Officer, commented: "AgFeed is a well managed, leading commercial feed and hog producer in China. We are committed to product excellence and constant improvement in deriving greater margins. We are also very excited with the current progress that we have made in our strategic discussions with several global players. AgFeed is on track to further consolidate its market leader position in a highly profitable market environment in China. As I return to the US early this week, I look forward to continued communications with our shareholders and industry executives."

Commenting on Recent Unusual Market Activities

AgFeed has received numerous calls from concerned shareholders over the recent stock activity. AgFeed is not aware of any negative events that could impact its fundamental business or financial projections. AgFeed has noticed however significant discrepancies between the shares that appear to be listed the electronic DTC system and the shares that actually exist on the shareholder records held by AgFeed's transfer agent -- potentially as a result of heavy naked short selling in FEED. In contrast to an ordinary short sale where the seller borrows a stock and sells it, with the understanding that the loan must be repaid by buying the stock in the market (hopefully at a lower price), in a naked short sale, the seller doesn't actually borrow the stock, and fails to deliver it to the buyer.

Last month, the Securities and Exchange Commission (SEC) said that it wants to ban the practice of naked short selling, and it announced a temporary ban on naked short sales of certain company shares. The SEC said that the practice is sometimes used to manipulate the price of a company's stock. SEC officials said that this procedure may have been used to drive down shares of various companies' price. The seller continuously hits the bid price and seeks to buy back shares from nervous shareholders who may sell simply because of a declining market price. In this regard, AgFeed believes that it may be a victim of this practice and has duly notified regulators, including the SEC. Meanwhile, shareholders may contact their stock brokers and request that their stocks not be used to assist short sellers.

Songyan Li, Ph.D., AgFeed's Chairman, commented: "Contrary to false market rumors, AgFeed's management and board members have not sold one single share of our stock. Our role as managers is to execute on our business plan and continue to deliver superb financial results. Our responsibility as corporate officers is to ensure that the best interest of our shareholders is protected and not continue to be hurt by stock manipulators. AgFeed is fully cooperating with regulatory agencies and shall provide full assistance in any possible investigation of these market manipulative actions."

5m Editor