Cathay Merchant Group Inc. Completes China Trading Platform
SHANGHAI, P. R. China, July 1 /PRNewswire-FirstCall/ -- Cathay Merchant Group
Inc. (AMEX:CMQ), is pleased to announce today that it has established a trading
platform for the export of aluminum products for Chinese companies. This
platform is completed with the acquisition of two aluminum rolling mills that
have an aggregated current production of 32,000 metric tonnes of finished
goods. Projected combined sales from these mills for the calendar year 2005,
exclusive of trading revenues, are estimated at euro 63 million with estimated
earnings before interest and taxes of euro 2.5 million.* Estimated earnings before interest and taxes ("Estimated EBIT") is computed by
adding the estimated interest charge and income tax to the estimated net
income. Management uses projected combined sales and Estimated EBIT as a
measurement of its own operating results. Management considers them to be a
meaningful supplement to net income as a performance measure primarily because
taxes and interest varies widely from company to company.
Estimated EBIT do not reflect the impact of a number of items that affect net
income, including financing costs. Estimated EBIT are not a measure of
financial performance under GAAP, and should not be considered as an
alternative to net income as a measure of performance, nor as an alternative to
net cash from operating activities as a measure of liquidity. Projected
combined sales and Estimated EBIT have significant limitations as an analytical
tool, and should not be considered in isolation, or as a analysis of our
results as reported under GAAP.
The aggregated purchase price for the mills was euro 15.3 million, subject to
certain adjustments, and is payable by way of euro 8 million in cash and euro
7.3 million of unsecured notes. The notes are due in 2008 and bear simple
interest of 4.2%.
One of the mills being acquired is owned by one of our shareholders and our
merchant bank, MFC Bancorp Ltd. An independent evaluation will be undertaken
to confirm that the purchase price is fair.
Michael Smith, President of Cathay Merchant Group Inc., commented "This
acquisition both expands our operations in China and allows access to the
European market as a distribution source for Chinese products. As well, it
allows the company to utilize technical expertise from the existing mills to
assist in integrating and growing our trading platform." Statements in this news release which are not purely historical, are
forward-looking statements as defined by the Private Securities Litigation
Reform Act of 1995, including any statements regarding beliefs, plans,
expectations or intentions regarding the future. Forward-looking statements in
this news release are marked with an asterisk (*). Management cautions that
forward-looking statements are not guarantees and that actual results could
differ materially from those expressed or implied in the forward-looking
statements. Important factors that could cause the actual results of
operations or financial condition of the Company to differ include, but are not
necessarily limited to, the risks and uncertainties discussed in the Company's
most recent annual report on Form 10-KSB and other documents filed by the
Company with the Securities and Exchange Commission. In addition, our estimate
of sales and earnings from the two aluminum rolling mills is subject to
continued demand for the finished goods at expected levels, and to an
uninterrupted supply of aluminum stock at current prices, neither of which can
be assured. Revenues may be significantly affected by changes in prices for
aluminum. The prices for commodity can fluctuate widely as a result of various
factors beyond our control such as supply and demand, exchange rates,
inflation, changes in global economics, and political, social and other
factors.
For more information please contact:
Cathay Merchant Group, Inc., North American Corporate Relations
Telephone: 604-408-8538
Facsimile: 604-683-3205
DATASOURCE: Cathay Merchant Group Inc.
CONTACT: Cathay Merchant Group, Inc., North American Corporate Relations, +1-604-408-8538, fax +1-604-683-3205
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