NEW YORK, Nov. 8, 2010 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. (OTCBB:CHGI) ( "China Carbon" or the " Company"), the largest wholesale supplier of fine grain and high purity graphite in China and one of the nation's top overall producers of carbon and graphite products, today announced that during the second and third quarters of 2010, it has received RMB 180 million in total from China Construction Bank through four loans, which is equal to roughly USD 27 million based on a RMB to US dollar conversion rate of 6.66 to 1.
Each of these loans has a one year term with an interest rate of 5.41% per year and will be renewable at the lender's option after the expiration of the loans. The loan agreement provides for operating and financial covenants typical for loan transactions of this type. Proceeds of the loans will be used by the Company to purchase raw materials, specifically focusing on higher purity graphite and fine grain graphite materials. This loan facility enables China Carbon to significantly reduce the risk of price inflation of raw materials and leverage increased facility capacity, and expand its profit margin, by allowing the Company to buy larger amounts of raw materials in advance in order to receive better pricing.
"We believe the price of raw materials will continue to rise in the coming years, the loans we received from China Construction Bank will allow us to lock in the price of our raw materials by facilitating larger advanced purchase arrangements at better pricing, in order to hedge against the risk of inflation. Furthermore, with the increasing sales and price of our products, we believe we will deliver improved results in next few quarters, showing incremental increases in our top and bottom line," said Donghai Yu, the Chief Executive Officer of China Carbon.
"The ability for us to receive these loans on such favorable terms from one of the largest Chinese banks further shows the confidence of our business operation and future industry potential," Donghai Yu continued.
About China Carbon Graphite Group, Inc.
China Carbon Graphite Group, through its affiliate, Xingyong Carbon Co., Ltd., manufactures carbon and graphite based products in China. The company is the largest wholesale supplier of fine grain and high purity graphite in China and one of the nation's top overall producers of carbon and graphite products. Fine grain graphite is widely used in smelting for colored metals and rare-earth metal smelting as well as the manufacture of molds. High purity graphite is used in metallurgy, mechanical industry, aviation, electronic, atomic energy, chemical industry, food industry and a variety of other fields. In September 2007, the company was approved and designated by Ministry of Science & Technology as a "National Hi-tech Enterprise." Of the 400 plus carbon graphite producers in China, China Carbon is the only non-state-owned company to receive this honor. For more information, visit www.chinacarboninc.com.
Safe Harbor Statement
This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors.