CD International Enterprises Sells 51% Stake in Shanghai Lang Chemical Subsidiary for $1.2 Million as Part of Management's Strategic Plan to Focus China Operations on Magnesium.

 

CD International Enterprises, Inc., a U.S. based company that produces, sources, and distributes industrial commodities in China and the Americas and provides business and financial corporate consulting services, on Oct. 8 announced the sale of 51% interest in Shanghai Lang Chemical Co., Ltd., a PRC company ("Lang Chemical") for $1.2 million as part of management's strategic plan to focus operations in China on magnesium production and distribution.

 

CD International acquired its stake in Lang Chemical in 2006 for approximately $700,000. Under the terms of the September 28, 2012 Equity Transfer Agreement, Black Stone Chemical Limited purchased 2% of CD International's interest in Lang Chemical and Mr. Jingdong Chen, CEO of Lang Chemical, and his wife Ms. Qian Zhu purchased the remaining 49% interest for an aggregate purchase price of $1,221,532. Of this amount $600,000 was tendered at closing and the balance is payable over one year at an annual interest rate of 6%. Management intends to focus CD International's industrial efforts in China solely on the production and distribution of pure magnesium through its current magnesium production facilities within magnesium segment.

 

Commenting on the sale, Dr. James Wang, Chairman and CEO of CD International, stated, "As we enter fiscal 2013 management is focused on executing our strategic plan of geographic diversification and clear definition of business segments. They believe that by clearly defining our magnesium operations as China based business, commodities distribution as our business in South America, and consulting services in the U.S., they can have more flexibility to maximize the value of our company. We are dedicated to building each of our segments for future growth and position our businesses to provide the greatest possible return for our company and its shareholders." 

We anticipate this disposition will result in a loss of approximately $1 million in the fourth quarter of fiscal 2012 based on the current carrying value of our 51% equity interest in Lang Chemical on our balance sheet.