China Biologic Products (CBPO), a blood plasma company, placed $9.6 million in convertible notes with accredited investors. China Biologic has been expanding by buying other blood plasma companies, and it is now the largest non-state owned blood plasma enterprise in China. The money will be used for final payments on its two latest purchases and to increase working capital.
Although the interest rate on the two-year notes was low – just 3.8% -- the other terms were generous. The price for conversion into shares is $4, which was actually below the stock price of the previous session’s close, $4.36. In addition, the note holders will receive warrants to buy 1,194,268 shares of China Biologic stock at a price of $4.80. The notes were not registered with the SEC.
The financing was led by Essence International Investment Limited, a special purpose company formed for investing in China Biologic.
China Biologic ended its Q1 with $34 million in cash, but only $2 million in working capital, because of the final payments for its acquisitions.
The recent acquisitions have had a positive effect on the company’s finances: China Biologic’s Q1 revenues increased 169% to $21.1 million. The company generated $7.1 million in operating cash flow during Q1.
Following announcement of the note offering, China Biologic slipped 11 cents lower to $4.25. At this price, the company has a market capitalization of $91 million.