Asian Bamboo AG / Key word(s): Miscellaneous 17.12.2013 09:58 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Hamburg, 17 December 2013 - Asian Bamboo AG ('Asian Bamboo', 'the Company', ISIN: DE000A0M6M79, ticker symbol: '5AB', ADR ticker symbol 'ASIBY'), an integrated company in the bamboo industry, announces the following results of its strategic review: Background In recent years the overall environment for running a bamboo plantation business in China has significantly deteriorated, which has caused the Company's revenue and profitability to decline sharply. Consequently the Management Board began a strategic review of the Company's operations in Q1 2013. The key problems, as identified by the Management Board, are: * Decreased harvests of bamboo shoots and higher costs for harvesting work due to a shrinking pool of available farm labour in the areas where Asian Bamboo operates and competition for labour from other agriculture industries such as tea and tobacco-leaf plantations * The prices of bamboo shoots and bamboo trees have increased at a slower rate than the costs for operating the business, which has led to lower profit margins * Low demand for bamboo trees due to weak exports of bamboo-based products as a result of higher costs and a strong currency (renminbi). At the same time, imported pulp products have gained market share for the same reasons * Overall economic weakness and restrictive loan policies by Chinese banks, which have hit the private sector particularly hard The current situation may improve in the future, but for the time being the Management Board does not see any indications of that happening. Results of the strategic review As a result of the difficult macro-economic situation described above, the Management Board, with the approval of the Supervisory Board, has decided the following: * The Company will largely maintain its current plantation business but for the time being does not intend to make any new investments in that business. If attractive possibilities arise to dispose of parts of the business, as in the case of the sale of the minority stake in Xinlifeng, that will be considered as long as it is in the best interest of the Company. In addition, the Management Board intends to explore the possibilities of leasing out parts of its plantations to third parties, thereby creating stable rental income. Furthermore, the Management Board will enter into discussions with the relevant farming communities about the two plantations which are not yet fully paid for. In summary, in the future it is likely that the Company will manage most of its plantations, lease out a part of its plantations and possibly sell parts of the plantations * The Company will give up the bamboo fibre processing project, due to low prices for pulp and cotton. This decision will not have any material financial consequences * The Management Board will continue to develop the decentralized organization plan, including decentralized decision making and the possibility of paying bonuses to plantation personnel in the event of good results * The Company intends to enter the property industry and to the degree possible use parts of its agricultural land for property projects. The property projects will be done through separate companies ('project companies') in which a Company subsidiary will become a shareholder. The Management Board believes that in most projects, Asian Bamboo will be a substantial shareholder together with other shareholders which are not connected to the Company. The project companies will have their own management teams made up of executives with experience in the property industry who will manage administration, construction, sales and marketing * The Company intends to issue a convertible bond which will be offered to all shareholders in order to strengthen the Company's capital base and to facilitate its entry into the property industry Rationale for entering the property industry The Chinese property market has developed favourably over the last 20 years in line with the overall increase in wealth and GDP per capita. It has also been very resilient in times of economic weakness. Despite high interest rates and government initiatives to limit speculation in the property market, prices remain high and volumes are solid. The same factors which are working against the Company in the plantation business will work for the Company in the property business. Rising salary levels and the urbanization process will continue to underpin demand for property. Furthermore, many Chinese prefer to invest in real estate rather than keep cash in banks or buy stocks or bonds. Although many details are yet to be released, it is clear that the Chinese government will allow more flexibility in the use of agricultural land in the future. To the degree that it is possible and reasonable, the Management Board will try to convert parts of its existing agricultural land for property developments. It is likely that such property developments would focus on the tourism industry, for example in Wuyishan, which is a popular tourism destination. In addition to the possible conversion of parts of its agricultural land, the Management Board has identified suitable existing property projects which it intends to enter with partners. Asian Bamboo is an attractive partner due to its financial strength, listed status and good relationships with local governments. These projects do not create any synergies with the Company's plantation business. The Management Board and Supervisory Board intend to propose a resolution ahead of the next Annual General Meeting to amend the Company's business focus in the articles of association to also include property development. Until that resolution has been adopted by the Annual General Meeting, which is expected to take place on 26 May 2014, and such resolution has been registered in the commercial register, the Company will not undertake any property activities on its own account. A detailed analysis of the opportunities and risks in the property business will be included in the securities prospectus that will be published in connection with an offering of convertible bonds. Issue of a convertible bond ('CB') In order to strengthen the financial situation and prepare for an entry into the property business, the Company intends to issue a convertible bond to all shareholders. According to the current plans, the convertible bond will be convertible into 4,627,500 shares, which means that for every 3.3 shares held the Company's shareholders will receive subscription rights to purchase the convertible bond equivalent to 1 share. For example, if a shareholder owns 1,000 shares, that shareholder will be entitled to subscribe to 302 convertible bonds with conversion rights for 302 shares. It is intended that the rights will be tradeable, which means that shareholders can purchase additional rights or sell the rights they receive through their shareholding. According to the current plans, the convertible bond will have a duration of three years and will not offer any interest or any other form of guaranteed return. The Management Board intends to guarantee that all convertible bonds for which no subscription rights have not been exercised will either be placed with third parties or will be subscribed for by the Management Board itself. This guarantees a successful fund raising. The securities prospectus will also contain more detailed information about the current situation in the bamboo industry and the plans and outlook for the Company's entry into the property industry. The securities prospectus is likely to be released before the next Annual General Meeting. The offering of the convertible bond will take place shortly after the prospectus has been made public. The final terms and conditions of the offering and the convertible bonds will be published in the securities prospectus. For enquiries, please contact: Asian Bamboo AG: Peter Sjovall +852-9385 3868 Chief Financial Officer [email protected] Anja Holst +49-(0)40 37644 798 Investor Relations Director [email protected] Disclaimer: This release is for information only and does not constitute an offer to sell, purchase, exchange or transfer any securities or a solicitation of any such offer in the United States or any other jurisdiction. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the 'Securities Act') and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. Neither Asian Bamboo AG ('Asian Bamboo') nor any other participant in the transactions described herein intends to register any securities under the Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States in connection with the proposals described in this announcement. The shares may not be offered to the public in any jurisdiction in circumstances which would require the preparation or registration of any prospectus or offering document relating to the shares in such jurisdiction. No action has been taken by Asian Bamboo or any of their affiliates that would permit an offering of the shares or possession or distribution of this announcement or any other offering or publicity material relating to such securities in any jurisdiction where action for that purpose is required. As far as this release contains forward-looking statements with respect to the business, financial condition and results of operations of Asian Bamboo, these statements are based on current expectations or beliefs of Asian Bamboo's management. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those reflected in such forward-looking statements. Apart from other factors not mentioned here, differences could occur as a result of changes in the overall economic situation and the competitive environment - especially in the core business segments and markets of Asian Bamboo. Also, the development of the financial markets and changes in national as well as international provisions particularly in the field of tax legislation and financial reporting standards could have an effect. Terrorist attacks and their consequences could increase the likelihood and the extent of differences. Asian Bamboo undertakes no obligation to publicly release any revisions or updates to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 17.12.2013 DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: Asian Bamboo AG Stadthausbrücke 1-3 20355 Hamburg Germany Phone: +49 40 37644 798 Fax: +49 40 37644 500 E-mail: [email protected] Internet: www.asian-bamboo.de ISIN: DE000A0M6M79, DE000A0M6M79 WKN: A0M6M7, A0M6M7 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, München, Stuttgart End of Announcement DGAP News-Service ---------------------------------------------------------------------------