China Essence CEO increases stake in the company, comments on loan obligations

China Essence Group Limited (the “Company”) is pleased to announce that its Chief Executive Officer Mr. Zhao Libin, purchased a total of 1,000,000 Company shares from the open market yesterday, at an average price of S$0.1137 per share.

With the latest purchase, Mr. Zhao Libin has increased its stake in the Company to 43.61% (or 171,044,000 shares), from 43.36% (or 170,044,000 shares) previously.

Commenting on his purchase, Mr. Zhao said, “The recent credibility issues surrounding S-chips and the subsequent plunge in market confidence pertaining to these counters have, unfortunately, affected China Essence’s share price. I would like to take this opportunity to increase my stake in the Company, the fundamentals of which remain sound despite the wider uncertainty. At the moment, the share price does not reflect the intrinsic value of China Essence, and this may present more buying opportunities in future.”
He added, “Our management remains committed to delivering results and ensuring that the Company is well-positioned ride out these challenging times.”

Update on DBS Bank loan

In response to recent concerns in the market on China Essence’s ability to pay the DBS loan of US$60 million due at the end of June 2009, the Company would like to assure investors that repayment does not pose a problem. In addition, there are a number of options that the Company is considering, among them an extension of the loan period or a refinancing arrangement that could potentially further optimise its capital structure.

Mr Zhao said, “We have always been prudent in our borrowings with regard to our expansion plans and have taken care not to overstretch our finances. The cash flow of the company does tend to be seasonal due to the large cash outlay to farmers during the harvest season and the higher sales orders before the annual spring festival, which is a pattern distinctive to our business. China Essence remains financially sound and we are confident of meeting all our loan obligations. Most of all, we are above board in all our dealings and conduct our business with a high level of integrity.”