18 July 2008 - On July 14, 2008, Sheng Yuan Nutritional Food Co., Ltd., a Chinese operating subsidiary of Synutra International, Inc., entered into an asset purchase agreement with Beijing Huilian Food Co., Ltd., a baby food producer in China, to purchase various assets from Huilian, including, but not limited to, Huilian's plant in Beijing (together with the buildings and equipment at the plant), the “Hui Li Duo” series registered trademarks for Huilian's products, Huilian's baby food formulas, and Huilian's production procedures.
Pursuant to the Agreement, within 45 business days after the first installment of the purchase price is paid, both parties have to use their best efforts to submit to the relevant government authorities applications to effect the transfer of the land, buildings and trademarks.
The purchase price for the assets is RMB45 million (approximately US$6.6 million) and will be paid in three installments, as follows: (i) first installment of RMB4.5 million, or 10%, is payable by July 21, 2008; (ii) second installment of RMB31.5 million, or 70%, is payable upon the parties obtaining receipts from the relevant government authorities with respect to the transfer applications required under the Agreement; and (iii) third installment of RMB9.0 million, or 20%, is payable within five business days after the transfer of the assets is completed and the government approvals for the transfer have been obtained. The completion of the sale and purchase of the assets is expected to occur by October 2008.
The Agreement contains customary representations and warranties. The representations and warranties were made only as of the date of the Agreement and have been made solely for the benefit of the parties to the Agreement and should not be relied on by any other person except as specified in the Agreement. The Agreement provides for rescission by either party in the event of the breach of certain representations, warranties and covenants by the other party, and for the party in breach to indemnify the other party in connection with any losses resulting from such breaches.
The foregoing description of the terms of the Agreement is qualified in its entirety by reference to the copy of Agreement, filed with this current report on Form 8-K as Exhibit 2.1, and incorporated herein by reference.