NEW YORK, Sept. 6 China Aoxing Pharmaceutical Company, Inc.(OTC Bulletin Board: CAXG), a China-based pharmaceutical company specializingin analgesics and pain management products, including Oxycodone, Pholcodine,Naloxone, and Tilidine, announced today that the Chinese government hasapproved the Company's acquisition of an additional 35% interest in HebeiAoxing Pharmaceutical Group Co. Ltd. ("Hebei Aoxing") from its Chairman andChief Executive Officer, Mr. Zhenjiang Yue. As the result of governmentapproval, China Aoxing Pharmaceutical Company, Inc. is now permitted to own95% of Hebei Aoxing, the main operating subsidiary of China Aoxing. ChinaAoxing also announced that it has amended the agreement with Mr. Yue and anyfuture obligation payment to Mr. Yue will be itemized as subordinated debt.
Currently, China Aoxing owns 60% of its main operating subsidiary, HebeiAoxing, while Mr. Zhenjiang Yue and members of his family own 40%. ChinaAoxing has an agreement with Mr. Yue, most recently disclosed in the 10-QSBfiled on May 15, 2007, to purchase an additional 35% interest in Hebei Aoxingfor $3.08 million, in order to bring China Aoxing's total interest in HebeiAoxing to 95%. The agreement had provided that the purchase price wouldconsist of $1.28 million in cash and a long-term promissory note of $1.80million. However, in the recent amendment, Mr. Yue has agreed that ChinaAoxing should keep the full $3.08 million to be used for working capital andstrategic development. Therefore, the amended agreement provides that thepurchase price will be paid by delivery of a subordinated promissory note inthe principal amount of $3.08 million, bearing interest at 5% per annum.
The amended agreement between Mr. Yue and China Aoxing provides that thepurchase of the additional 35% interest will close only if China Aoxingobtains USD $5 million in capital between August 1, 2006 and September 14,2008. From August 1, 2006 to present, China Aoxing has not yet raised overUSD $3.08 million.
Zhenjiang Yue, China Aoxing's Chairman and CEO, commented, "We are pleasedto receive approval by the Chinese government to complete this transaction.This acquisition will streamline our company's capital structure, provide uswith greater operating flexibility and maximize the equity interest of ChinaAoxing's shareholders. This announcement speaks to the Company's continuedefforts and commitment to enhancing value for our shareholders."
About China Aoxing Pharmaceutical Group
China Aoxing Pharmaceutical Company, Inc. (OTC Bulletin Board: CAXG) is apharmaceutical company in China which specializes in research, development,manufacturing and distribution of a variety of analgesics and pain managementproducts. Its operating subsidiary, Hebei Aoxing Pharmaceutical Group Co. Ltd,is a corporation organized under the laws of the People's Republic of China.Hebei Aoxing is one of only a handful of companies in China to be granted thelicense to manufacture certain drugs including Oxycodone, Pholcodine, Naloxone,Tilidine, and is working closely with the Chinese government to assureavailability throughout China.Contact Dr. Hui Shao Senior Vice President China Aoxing Pharmaceutical Company 201-420-1075 Ashley Ammon MacFarlane & Bill Zima Integrated Corporate Relations, Inc. 203 682 8200
SOURCE China Aoxing Pharmaceutical Company, Inc.