WUXI, China, Oct. 28 /PRNewswire-Asia/ -- China Wind Systems, Inc. (OTC Bulletin Board: CHWY) ("China Wind Systems" or the "Company"), a leading supplier of forged products and industrial equipment to the wind power and other industries in China, today announced the closing on October 23, 2009 of a private placement financing with a group of accredited investors led by Barron Partners LP for 2.4 million shares of series A convertible preferred stock at a purchase price of $1.00 per share. The series A preferred stock is the same series of preferred stock that was issued in the Company's November 2007 private placement.
Since the Company recently completed a one-for-three reverse split for its common stock, each share of series A preferred stock is presently convertible into one-third share of common stock. In connection with the stock sale, Barron Partners, who purchased 1,500,000 shares of series A preferred stock in the financing, entered into a voting agreement with Jianhua Wu, the Company's chief executive officer, pursuant to which Mr. Wu has the right to vote the series A preferred stock purchased in the financing and the underlying common stock as to all matters for which stockholder approval is obtained as long as Barron Partners or its affiliates own the stock.
Pursuant to the certificate of designation for the series A preferred stock, no holder can convert the series A preferred stock to common stock, if the conversion would result in the holder or its affiliates beneficially owning more than 4.9% of the Company's outstanding common stock. Barron Partners currently owns more than 5% of the outstanding common stock.
The proceeds from the private placement will be utilized primarily in connection with funding a new production line for electro-slag re-melted (ESR) products at the Company's forged products facility. ESR technology is utilized to increase the durability and quality of steel material used in high-quality yaw bearings and other high performance components.
"We anticipate that we will begin production of ESR forged products by mid-year 2010," commented Mr. Jianhua Wu, Chairman and CEO of China Wind Systems, Inc. "We believe that our competitive position would be enhanced by manufacturing ESR products, which are high-end forged components for the wind power industry."
The securities issued in the private placement have not been registered under the United States Securities Act of 1933 as amended or the securities laws of any other jurisdiction. Until they are registered, these securities may not be sold by investors in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements. For more detailed information on this financing, refer to the Company's Current Report on Form 8-K which was filed with the Securities and Exchange Commission on October 26, 2009.
About China Wind Systems, Inc.
China Wind Systems supplies forged rolled rings to the wind power and other industries and industrial equipment to the textile and energy industries in China. With its newly finished state-of-the-art production facility, the Company is expected soon to significantly increase its shipment of high-precision rolled rings and other essential components primarily to the wind power and other industries. For more information on the Company, visit http://www.chinawindsystems.com. Information on the Company's Web site or any other Web site does not constitute a portion of this release.
Safe Harbor Statement
This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. These forward-looking statements are often 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 that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov ). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
