(Source: PRNewswire-FirstCall)
NEW YORK and BEIJING, Aug. 3 /PRNewswire-FirstCall/ -- China Advanced Construction Materials Group, Inc. ("China ACM") (BULLETIN BOARD: CADC) , a leading provider of ready-mix concrete and related services in China, today announced that it has paid off its $4.4 million short-term loan, which carried an interest rate of 15%. Additionally, the company has significantly reduced its long-term receivables as of June 30, 2009. The company transferred approximately $5.7 million of its receivables as a method of payment for equipment and other asset purchases, transferred $3.5 million of receivables for future lease payments, and factored approximately $4.1 million of additional receivables.
The company also announced that on July 28, 2009 it issued approximately 651,000 shares of common stock at $2.30 per share to certain employees and associates of the company, partially in lieu of equity-based compensation, resulting in gross proceeds of approximately $1.5 million.
Mr. Xianfu Han, Chairman and Chief Executive Officer, stated, "We continue to generate strong cash flow and reduce our long-term receivables, which has allowed us to pay down our short term loan and significantly enhance our balance sheet. By eliminating the interest payments on our short term loan, we expect to save approximately $600,000 per year. However, it is important to note that as we continue to expand our infrastructure and add capacity, we may utilize either short or long-term debt in order to minimize shareholder dilution. Most of our receivables are derived directly from government entities, which are extremely credible within the People's Republic of China. As a result, we are able to transfer the rights to these receivables as a method of payment for the purchase of equipment and goods at fair market value, as well pre-pay future lease expenses. We also completed a small capital raise among certain employees and associates of the company in China. This allowed us to quickly and cost effectively raise capital to accelerate our expansion, while incentivizing employees and strategic partners that participated. We were quite pleased with the terms of the transaction, which incurred no transaction fees and were negotiated and agreed upon in early July 2009, while the average share price was well below current levels."
About China ACM
China ACM, founded in 2002 and based in Beijing, China, is a leading producer of advanced construction materials for large scale commercial, residential, and infrastructure developments. The company is primarily focused on producing and supplying a wide range of advanced ready-mix concrete materials for highly technical, large scale, and environmental construction projects.
