News... International Lorain Holding, Inc. Utilizes APO(SM) Service to Go Public and Complete Private Financing
JUNAN COUNTY, China, May 3 /Xinhua-PRNewswire-FirstCall/ -- Millennium
Quest, Inc., a Delaware corporation ("Millennium") (OTC Bulletin Board:
MLQT.OB), announced the closing of a share exchange transaction with the
shareholders of International Lorain Holding, Inc., a Cayman Islands
company ("Lorain"), and a related private placement financing transaction.
Millennium will operate through its consolidated indirect Chinese
subsidiaries to execute the current business plan of those subsidiaries.
Under the terms of the share exchange transaction, Lorain's
shareholders were issued 697,663 shares of Millennium's Series B Voting
Convertible Preferred Stock in exchange for 100% of the issued and
outstanding shares of Lorain. If converted into common stock of Millennium
at the current conversion rate for conversion of the Series B Voting
Convertible Preferred Stock into common stock and if all Series A Voting
Convertible Preferred Stock of Millennium is converted into common stock at
the current conversion rate for converting Series A Voting Convertible
Preferred Stock into common stock, the shares of Series B Voting
Convertible Preferred Stock received by the shareholders of Lorain after
conversion to common stock will represent approximately 65.43% of the total
issued and outstanding common stock of Millennium (after the closing of the
private placement described below).
In conjunction with the share exchange transaction, a private placement
financing transaction was completed in which Millennium issued 299,055.78
shares of its Series B Voting Convertible Preferred Stock, along with
warrants for the purchase of an additional 59,811.16 Series B Voting
Convertible Preferred Stock, at a rate equivalent to $4.25 per common share
post conversion and post reverse split (as described below), in exchange
for approximately $19.8 million in gross offering proceeds, before payment
of commissions and fees. Also, warrants for the purchase of an additional
20,933.90 of Series B Voting Convertible Preferred Stock have been issued
to Sterne, Agee & Leach, Inc. and its designees. The shares of Series B
Voting Convertible Preferred Stock issued to investors in the financing
transaction represent approximately 27.13% of the total issued common stock
of Millennium if converted into common stock of Millennium at the current
conversion rate of the Series B Voting Convertible Preferred Stock and if
all Series A Voting Convertible Preferred Stock of Millennium is converted
into common stock of at the current conversion rate the Series A Voting
Convertible Preferred Stock. Following the consummation of the share
exchange transaction and the private placement, and assuming conversion of
all outstanding shares of Series A Voting Convertible Preferred Stock and
Series B Voting Convertible Preferred Stock into shares of common stock at
the present rate of conversion and the exercise of all warrants issued, the
number of issued and outstanding shares of common stock of Millennium, on a
fully diluted, basis is 26,810,593.
The $19.8 million private placement transaction includes "make good"
provisions based on the achievement of certain net income targets for
Millennium's 2007 and 2008 fiscal years. Should Millennium, on a
consolidated basis, not achieve $9.266 million in fiscal 2007 net income,
the investors in this transaction will receive up to 3,533,554 shares of
common stock (after shares have been adjusted for the reverse split
discussed herein and converted into common) from original Lorain
shareholders. Should Millennium not achieve $12.956 million in fiscal 2008
net income, the investors in this transaction will receive up to 3,533,554
shares of common stock (after the shares have been adjusted for the reverse
split discussed herein and converted into common) from original Lorain
shareholders. Lorain expects to achieve gross revenues of approximately
$80.6 million and $110.7 million in fiscal 2007 and 2008, respectively, to
support achievement of these "make good" net income targets.
Lorain is a Cayman Islands holding company that only operates through
its subsidiaries, which are based in the People's Republic of China. As a
result of the exchange transaction, Si Chen, Lorain's principal executive
officer was appointed to the Board of Directors of Millennium and senior
officers of Lorain were elected as executive officers of Millennium. The
companies will operate on a consolidated basis, executing upon the current
business plan of Lorain, under Mr. Chen's leadership.
Mr. Chen, the new Chief Executive Officer of Millennium stated, "We
want to thank our financial advisor, HFG International, Limited, for
facilitating our efforts in connection with our private financing and the
going public transaction. These transactions have given us access to the US
capital markets, with the intent of capitalizing on significant growth
opportunities." Sterne, Agee & Leach, Inc, acted as the placement agents in
the approximately $19.8 million financing transaction. Heritage Management
Consultants, Inc. provides professional and management and advisory
services to Millennium.
Millennium's shares are listed on the Over-the-Counter (OTC) Bulletin Board under the symbol, MLQT.OB.
Lorain is a leading food processing company engaging in the
development, manufacture and sale of food products worldwide. Formed in
1994, the company produces hundreds of varieties of food products,
categorized into three interrelated divisions: chestnut products, processed
food, including frozen, canned and packaged goods, and convenience foods,
consisting of meals ready to eat (MRE) and ready to cook (RTC). Lorain,
headquartered in Junan County, Shandong Province, owns and operates four
manufacturing facilities, two in Junan County, one in Luotian Hubei
Province and one in Beijing. In addition to serving the growing food market
in China, Lorain sells its products in 23 countries under both the "Lorain"
brand and under private labels. Lorain currently employs over 1,250 people,
and sells its products through a distribution network of wholesalers,
trading companies and supermarket chains. For the twelve months ended
December 31, 2006, Lorain reported consolidated net sales of approximately
$49.1 million and consolidated net income of approximately $5.9 million.
Lorain is investing about $16.8 million of the net proceeds from the
private placement to meet the growing international and domestic demand for
their products, and using about $1 million of the net proceeds from the
private placement to pay off an existing bridge loan. Lorain also plans to
expand its production capacity by extending the current space for workshops
used in raw material preparation, adding new processing and packaging lines
and increasing storage facilities.
As a result of the consummation of the share exchange and private
placement transactions, Millennium intends to file within two days of this
release, a preliminary information statement on Schedule 14C with the U.S.
Securities and Exchange Commission. The Schedule 14C relates to the
approval by Millennium's Board of Directors and stockholders of
Millennium's Amended and Restated Certificate of Incorporation which:
-- Increases the number of Millennium's authorized common stock;
-- Effectuates a 1 for 32.84 reverse stock split of Millennium's common
stock; and
-- Changes the name of the company to American Lorain Corporation.
The action to increase Millennium's authorized common stock is designed
primarily to accommodate the conversion of Millennium's Series A Voting
Convertible Preferred Stock and Series B Voting Convertible Preferred Stock
into common stock. After the amendment and restatement of Millennium's
Certificate of Incorporation, the authorized common stock of Millennium
will be increased from 20,000,000 to 200,000,000 shares. Shares of Series A
Voting Convertible Preferred Stock convert into shares of common stock on a
428.56 common shares for 1 Series A Voting Convertible Preferred Stock
share basis, and shares of Series B Voting Convertible Preferred Stock
convert into shares of common stock on a 767.635 common shares for 1 Series
B Voting Convertible Preferred Stock share basis, and, thereafter, all
common stock will be subject to the 1 for 32.84 reverse stock split
described in the next paragraph.
The preliminary Schedule 14C information statement will also describe
the 1 for 32.84 reverse split of Millennium's common stock, which has been
approved by Millennium's Board of Directors and stockholders and will be
effectuated by operation of the Amended and Restated Certificate of
Incorporation. The 1 for 32.84 Reverse Split will reduce the number of
issued and outstanding shares of Millennium's common stock and number of
shares of its common stock issuable upon conversion of the shares of
Millennium's preferred stock, and effectively increases the number of
authorized and unissued capital stock available for future issuance. The 1
for 32.84 Reverse Split will become effective when the Amended and Restated
Certificate of Incorporation is filed with the Secretary of State of the
State of Delaware following the expiration of the 20-day period mandated by
Rule 14C of the Securities Exchange Act of 1934. All outstanding warrants
and conversion rights will be adjusted to reflect the stock split such that
a warrant for 1 pre-reverse split common share would be valid for .03045067
post-reverse split common shares.
When the reverse split becomes effective, each share of common stock
will automatically become .03045067 shares of the new common stock.
The table below illustrates the current capital structure of Millennium
and upon effectiveness of the amendment to and restatement of Millennium's
Certificate of Incorporation, after giving effect to the conversion of the
Series A and B Preferred Stock into common stock and the reverse stock
split:
Before Conversion of Preferred After Conversion of Preferred
Stock and Reverse Stock Split Stock and Reverse Stock Split
Title of Number of
Issued and Number of % Total Shares of % Total
Outstanding Shares Capital Stock Common Stock Capital Stock
Shares
Common Stock 10,508,643 1.3% 24,923,178 100%
Series A
Preferred Stock 100,000 5.2% - 0%
Series B
Preferred Stock 996,718.78 93.5% - 0%
Total 100% 100%
The approval by Millennium's Board of Directors and stockholders of the
Amended and Restated Certificate of Incorporation also operates to change
the name of the company from "Millennium Quest, Inc." to "American Lorain
Corporation." The name change to "American Lorain Corporation" will more
accurately reflect the anticipated future business operations.
Additional information regarding the increase in Millennium's
authorized common stock, its 1 for 32.84 reverse stock split and the name
change as well as a copy of Millennium's Amended and Restated Certificate
of Incorporation, can be found in Millennium's Preliminary Information
Statement on Schedule 14C and its Current Report on Form 8-K.
FORWARD LOOKING STATEMENTS
This release contains certain "forward-looking statements" relating to
the business of Millennium and its subsidiary companies, which can be
identified by the use of forward-looking terminology such as "believes,
expects" or similar expressions. Such forward looking statements involve
known and unknown risks and uncertainties, including all business
uncertainties relating to product development, marketing, concentration in
a single customer, raw material costs, market acceptance, future capital
requirements, competition in general and other factors that may cause
actual results to be materially different from those described herein as
anticipated, believed, estimated or expected. Certain of these risks and
uncertainties are or will be described in greater detail in our filings
with the Securities and Exchange Commission. Millennium is under no
obligation to (and expressly disclaims any such obligation to) update or
alter its forward-looking statements whether as a result of new
information, future events or otherwise.
CONTACT: Mr. Sheldon Saidman
(719-548-9963)
SOURCE Millennium Quest, Inc.
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