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SkyPeople Fruit Juice Announces Agreement To Manufacture Orange Juice Products

XI'AN, China, Oct. 29, 2012 /PRNewswire-FirstCall/ -- SkyPeople Fruit Juice, Inc. (NASDAQ: SPU) ("SkyPeople" or "the Company"), a producer of fruit juice concentrates, fruit juice beverages and other fruit-related products, announced today that SkyPeople Juice Group Co., Ltd., a company organized under the laws of the People's Republic of China (" China") and a 99.78%-owned subsidiary of the Company, entered into an Investment/Service Agreement with the Yidu Municipal Government in Hubei Province, China (the "Agreement"), for the construction and establishment of a zone for the manufacturing and comprehensive deep processing of concentrated orange juice, orange juice drinks and other orange-related products.

"We are very excited about the Yidu project. We estimate that the total investment in the project, including fixed assets, land use rights and working capital, will be approximately RMB 380 million (approximately $60.8 million). Our diversification into the orange products sector represents an important strategic move in our core business as it further expands our product base and will ultimately add to the Company's revenue and profits. Our expansion into the orange juice and other orange-related market is driven by our belief that there is a shortage of such products in the market. We believe that this new product area augments our existing product platform and represents a competitive advantage in our sector with the potential of further mitigating both the regional and seasonal cyclicality of our major fruit products," commented by Mr. Yongke Xue, the CEO of SkyPeople. "SkyPeople is committed to creating fruit products that have strong long-term demand fundamentals where we can leverage our operating capabilities and utilize our marketing and distribution economies of scale. We believe that the agreement with the Yidu Municipal Government will be of significant benefit to both parties and will generate a sound return on investment for the Company."

Pursuant to the Agreement, the project will be built on a parcel of land approximately 280 mu in size (approximately 46 acres) located in the city of Yidu, Hubei Province, China. The consideration for transferring the land use rights for the project to the Company is RMB 0.3 million (approximately $48,030) per mu and the construction period of the project is expected to be between 2012 through 2014. Pursuant to the Agreement, the total amount of investment in fixed assets and land use rights for the project is expected to be RMB 300 million (approximately $48 million).  The Company plans to fund the project using its current cash balances, expected future cash flow from operations and debt.

Pursuant to the Agreement, the Company will establish a concentrated orange juice production line with a capacity to process 45 tons of oranges per hour, and a fruit juice beverage production line with a capacity to produce 6,000 bottles per hour. The Company will also establish other facilities such as storage facilities, sales and distribution center and R&D center.

Stock quotes in this article: SPU 

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