SHENZHEN, China, Sept. 6 /Xinhua-PRNewswire-FirstCall/ -- China Water & Drinks, Inc. (OTC Bulletin Board: CWDK) ("China Water & Drinks" or "the Company"), a leading producer and distributor of bottled water in the People's Republic of China ("PRC"), today announced that on August 31, 2007, it entered into a stock purchase agreement with two shareholders of Hutton Holdings Corporation ("Hutton") to acquire a 48% stake in Hutton in exchange for $9.0 million and 2,133,333 shares of China Water & Drinks common stock.
Hutton owns 100% of Guozhu Holdings Limited, a Hong Kong company ("Guozhu Holdings"), which operates three wholly-owned companies with operations in mold manufacturing, PET packaging and bottle manufacturing. Guozhu Holdings is a leader in the bottled water and drinks industry in China, with over 50% market share in molding for the plastic bottle industry. Guozhu Holding's unaudited revenue and net profit for the year ended December 31, 2006 were $30.7 million and $7.5 million, respectively. Its customer base includes reputable water and drinks procurers, such as Coca-cola, Wateson's and Danone, Wahaha and Huiyuan Juice.
"The acquisition of Hutton is our first step in our plan to vertically integrate our operations and secures a stable and reliable supply source. This strategic ownership will enhance our bottled water production technology, which should reduce our costs over the long-run. It is also an important milestone that will allow us to implement our aggressive acquisition plan," commented by Mr. Xing Hua Chen, CEO, CWDK. "Hutton's strong financial performance will significantly contribute to our revenue and net profit for the coming years."
Pursuant to the transaction, the Company agreed to purchase an aggregate of 11,000,000 shares of Hutton's common stock and 5,000,000 shares of Hutton's preferred stock from Hutton's shareholders Cai Yingren and Wu Wen. Each preferred share is convertible into five shares of Hutton's common stock and shall be automatically converted on the second trading day following the effectiveness of an amendment to Hutton's articles of incorporation to increase the number of authorized shares of common stock from 50,000,000 to 150,000,000. Upon conversion, China Water & Drinks Inc will own 48% of the total outstanding shares of Hutton. In consideration, China Water & Drinks will pay the Hutton shareholders $9.0 million in cash and 2,133,333 shares of the Company's common stock. China Water & Drinks will not manage directly nor take control of the operations of Hutton.
About Hutton Holdings Corporation
Hutton's shares are currently listed on the OTC BB under the trading symbol "HTTH." Hutton owns 100% of Guozhu Holdings Limited, a Hong Kong company ("Guozhu Holdings"), which currently operates three wholly-owned operating companies: Fogang Guozhu Plastics Company Limited, Fogang Guozhu Blowing Equipment Company Limited and Guangdong Guozhu Precision Mold Company. Established in 1993 and located in Guangdong Province of the PRC, Guozhu Holdings carries out its business in three major areas: 1) mold manufacturing, 2) PET packaging and 3) bottle manufacturing. Guozhu Holdings is a leader in the bottled water and drinks industry in China, with over 50% market share in molding for the plastic bottle industry. Its customer base includes reputable water and drinks procurers, such as Coca-cola, Wateson's and Danone, Wahaha and Huiyuan Juice.
About China Water & Drinks, Inc.
China Water & Drinks, Inc. is a leading producer and distributor of bottled water in China. Through its production facilities in Guangzhou, Zhangjiang, Feixian, Nanning and Changchun, the Company produces and distributes bottled water to 11 provinces in China. The Company markets its own product under the brand ‘Darcunk', supplies purified water to both local and international beverage brands such as Coca-Cola and Uni-President and provides private label bottled water for companies such as Sands Casino, Macau.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to the Company's ability to complete product orders, coordinate product design with its customers, ability to expand and grow its distribution channels, political and economic factors in the People's Republic of China, the Company's ability to find attractive acquisition candidates, dependence on a limited number of larger customers and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
