Baoding, China, 12 April 2010 -- /PRNewswire/ -- Orient Paper, Inc. (AMEX:ONP), a leading manufacturer and distributor of diversified paper products in Hebei, China, today announced that on 09 April 2010, the company entered into a definitive equipment purchase agreement with Henan Qinyang First Paper Machine Limited to purchase a corrugating medium paper production line with an annual production capacity
of 360,000 tons for RMB 190.0 million (approximately USD 27.8 million).
According to the agreement, Qinyang Paper Machine will be responsible for complete installation of the new production line
within the next six months. Orient Paper had signed a letter of intent
with Qinyang Paper Machine on 15 March 2010, and made a refundable deposit of RMB 38.0 million (approximately USD 5.6 million), which is about 20% of the total purchase price. With the signing of the agreement, the deposit has been applied toward the first installment of the total purchase price. The remainder of the payment will be made in additional installments in commensuration with the progress made on equipment installation.
Orient Paper expects to begin trial production in the beginning of the fourth quarter of 2010. Upon successful completion of trial production at the end of 2010, Orient Paper plans to begin large scale production of corrugating medium paper on its newly added production line and achieve a utilization rate of approximately 70% in fiscal year 2011.
"With the additional 360,000 tons of corrugating medium paper production capacity, we are set to expand our market share in northern China's rapidly growing paper industry," said Zhenyong Liu, chairman and chief executive officer
. "The newly acquired production line will increase our total production capacity from the existing 280,000 tons to reach 640,000 tons by 2011. Corrugating medium paper production capacity is expected to increase over 200%. The continued progress and development of our regional economy and the domestic consumer and packaging industries have resulted in robust demand for corrugating medium paper products. We believe the additional capacity will enable us to better serve the growing demand for corrugating medium paper contributing to our future revenue growth and profitability."
Orient Paper, Inc., through its wholly owned subsidiaries, Shengde Holdings, Inc., controls and operates Baoding Shengde Paper Co., Ltd., and Hebei Baoding Orient Paper Milling Co., Ltd (HBOP). Founded in 1996, HBOP is engaged in the production and distribution of products such as corrugating medium paper, offset printing paper, writing paper
, and other paper and packaging-related products in China
. The company uses recycled paper as its primary raw material. Baoding Shengde, founded in June 2009 and located in Baoding
, is engaged in the production and distribution of digital photo paper. As one of the largest paper producers in Hebei
Province, China, HBOP is strategically located in Baoding, a city in close to Beijing,
where the majority of publishing houses in China are based. Orient Paper is led by an experienced management team
committed to diversifying the company's product offering and delivering tailored services to its customers. For more information, visit http://www.orientalpapercorporation.com