BAODING, China (News release) -- IT Tech Packaging, Inc. announced that Hebei Baoding Dongfang Paper Milling Company Limited, the major operating entity of the Company, has entered into an acquisition Agreement with Hebei Tengsheng Paper Co. Ltd., pursuant to which Dongfang Paper shall acquire 100% equity interests in Tengsheng Paper and all right, title and interest in and to all assets owned by Tengsheng Paper. Tengsheng Paper is leasing its land of approximately 50 acres to the Company with a lease term of 15 years that expires in November 2027. After the completion of the acquisition, the PM8 production line will be transferred to Tengsheng Paper which as a wholly-owned subsidiary of Dongfang Paper, will focus on manufacturing and distribution of tissue paper in the future.
Pursuant to the Agreement entered into on June 25, 2019, in consideration for the Purchased Equity and Assets, Dongfang Paper will pay to Tengsheng Paper a total purchase price of RMB320 million(approximately $47 million) (the "Purchase Price") within six months of the execution of the Agreement. Further, Dongfang Paper will entrust the existing management of Tengsheng Paper to continue operating the business of Tengsheng Paper and the existing legal representative of Tengsheng Paper will continue acting as the legal representative of Tengsheng. Dongfang Paper will entrust the prior shareholders of Tengsheng Paper to represent it to hold and exercise all shareholder' rights to which it is entitled as the shareholder of Tengsheng Paper.
Mr. Zhenyong Liu, Chairman and Chief Executive Officer of IT Tech Packaging commented, "We have had a solid business partnership with Tengsheng Paper since 2012. With land use rights of 761.05 mu, we believe that Tengsheng Paper will offer us ample site and space for our tissue paper production lines. The acquisition of Tengsheng Paper shows our confidence in prospect of the Chinese tissue paper market and we also believe it paves the way for us to further penetrate into the tissue paper market."
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