-- Company signs lease on 23,000 square-foot production facility
-- Adds approximately 620 tons, or 39%, to linen yarn production and 2.1 million meters, or 26%, to linen fabric production capacity annually
HARBIN, China, July 20 /PRNewswire-Asia/ -- China Linen Textile Industry, Ltd. (OTC Bulletin Board: CTXIF) ("China Linen" or the "Company"), a China-based company engaged in the production and sale of linen yarn and various types of linen fabric, today announced that it has expanded its linen yarn production capacity and added the capability to bleach linen fabric by entering into a Fixed Asset Lease Agreement with Lanxi Tianqianfang Linen Co., Ltd. (the "Lessor").
We believe the leased facility, which includes a building with an area of 23,358 square feet, a spinning production line with 3,000 spindles, bleaching machines and other equipment, will increase the Company's annual capacity by approximately 620 tons of linen yarn, or 39%, and 2.1 million meters of linen fabric, or about 26%, which is expected to add approximately $4.9 million in revenue, $1.5 million in gross profit and $1.2 million in net income over the next twelve months. The bleaching factory, with annual capacity to bleach 10 million meters of linen fabric, is expected to generate approximately $1.5 million in additional net income over the next twelve months. China Linen has commenced operation at the leased facility and expects to generate approximately $1.4 million in net income in the second half of 2010 from its new facility.
"We are pleased to sign this lease agreement which enables us to address our short-term capacity constraints while providing an option to acquire the facility," stated Mr. Gao Ren, chairman and president of China Linen. "We have seen an increase in demand from domestic and international customers this year, and this lease agreement enables us to fulfill more of those orders and improve our 2010 financial performance. In addition, we believe the bleaching facility will add a downstream vertical component to our value chain and further increase our gross margin. We plan to pursue more orders with the goal of full utilization of the leased facility and increasing our profit further for 2010 and 2011."
The lease term is for a period of twelve months, which commenced on July 1, 2010. China Linen intends to acquire all of the equity of the Lessor at some future date pursuant to a non-binding Company Acquisition Intent Agreement entered into between China Linen and the Lessor on April 26, 2010. In the event the Lessor arranges to transfer or sell the Facility to a third party during the term, or within the six-month period following the term, China Linen will have a right of first refusal to enter into such arrangements to acquire the facility under the same terms and conditions as were negotiated by the third party.
About China Linen Textile Industry, Ltd.
China Linen Textile Industry, Ltd. ( http://www.chinalinen.cc/ ) is principally engaged in the production and sale of linen yarn and various types of linen fabric. The Company is also involved in consultation and R&D related to linen technology and linen products. The Company carries on all of its business activities through its subsidiary, Heilongjiang Lanxi Sunrise Linen Textile Industry Co., Ltd. ("Lanxi Sunrise"), established in June 2002 and located in Lanxi County, the "Homeland of Flax in China," near Harbin City in China. Lanxi Sunrise has one yarn-spinning factory and two fabric weaving factories in its 28,000 square meters of building area with a staff of 1,500 and 310 sets of world-class, advanced production machinery. Annual production capacity totals approximately 1,600 tons with 50 different types of yarn and 8 million meters of fabric with 110 types. Approximately 55 percent of its products are exported to more than 10 countries.
Forward-looking statements:
The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.
For more information, please contact:
China Linen Textile Industry, Ltd.
Mr. James Shaofeng Qi, CFO
Tel: +86-139-1093-4932
HC International, Inc.
Scott Powell, Vice-President
Tel: +1-917-721-9480
Email: scott.powell@hcinternational.net
