Maple Leaf Reforestation Inc.
TSX VENTURE : MPE

September 05, 2012 11:22 ET

Maple Leaf Reforestation Obtains 20 Million Rmb ($3.2 Million Cdn) Non-Dilutive Secured Loan from Hong Kong Fund

CALGARY, ALBERTA--(Marketwire - Sept. 5, 2012) - Maple Leaf Reforestation Inc. (TSX VENTURE:MPE) ("Maple Leaf" or the "Corporation") announces that it has signed a secured loan agreement with a private Hong Kong fund company, which was arranged by Huaye Taifu Capital Ltd. ("Huaye Taifu"), for 20 million Rmb (approximately $3.2 million Cdn) (the "Loan"). The lending period for the Loan is September 4th, 2012 to September 3rd, 2018. The Loan bears an interest rate of 12% per annum during the first 3 years and 16% per annum during years 4 to 6 (the "Interest") on amounts drawn by Maple Leaf, and Interest shall be paid 3 days before the anniversary date each year.

The Loan will be secured by all of the assets owned by Maple Leaf's China subsidiary, Inner Mongolia Maple Leaf Forestry Co. Ltd. The initial draw on the Loan will be for 6 million Rmb (approximately $960,000 Cdn) (the "Initial Principal") which will be sent to Maple Leaf's China subsidiary's bank account within 10 days after all lien and collateral documents are submitted by Maple Leaf to the Beijing legal counsel handling the transaction. Maple Leaf is not required to issue any shares in connection with the Loan and Maple Leaf will only be required to pay a commission of 5% to a third party upon each draw of funds. The remaining $14 million Rmb (approximately $2.24 million Cdn) will be drawn as needed by Maple Leaf.

Proceeds from the Initial Principal will be used to start a tree nursery later this year that will harvest approximately 3 million trees. Trees sell at a substantial premium to seedlings in China. While seedlings sell for approximately 1 Rmb ($0.16 Cdn) per seedling, a 3-year old tree sells for approximately 5 Rmb ($0.80 Cdn) per tree and a 5-year old tree sells for approximately 15 Rmb ($2.40 Cdn). The balance of the Loan will be drawn by Maple Leaf upon finalizing its due diligence on various project opportunities. Maple Leaf's decision regarding the project opportunities will be based on achieving the maximum operational returns for the Company and keeping within its mandate of participating in low capex projects that are environmentally beneficial to China. A separate news release will be forthcoming to outline Maple Leaf's expansion plans.

Raymond Lai, Maple Leaf's President & CEO comments "This $3.2 million Cdn ($20 Million Rmb) loan is hopefully just the beginning of a long-term working relationship with Huaye Taifu, who normally seeks to provide minimum funding of $16 million Cdn (100 million Rmb). I will be travelling to China in mid-September to meet with Huaye Taifu's representatives and we will be furthering discussions regarding the possibility of further collaborative arrangements between Huaye Taifu and Maple Leaf. Given the extremely tough financing environment that currently exists for junior issuers, forming an association with such a strong financial company from China is a significant blessing for us, and we will ensure that we capture this opportunity with dedication and commitment to furthering growth in Maple Leaf's operations."

About Huaye Taifu Capital Ltd.

Huaye Taifu is a well known international private fund company in China with its main office in Beijing. Huaye Taifu also has partnerships with several well known foreign funding companies such as Credit Swiss, Bank of East Asia and Australia National Investment Ltd. One of Huaye Taifu's founders, Frank Quattrone, is a well known private equity investor who has been involved with early-stage investments and advisory work in numerous public companies, including both Amazon and Google.

The terms of the Loan are subject to review and approval by the TSX Venture Exchange.

About Maple Leaf Reforestation Inc.

Maple Leaf is a Canadian company that focuses in the environmental industry with 2 main operating arms:

  1. Eco-Agriculture - it operates a large-scale nursery business in Inner Mongolia, China that is focused on growing value-added tree seedlings and nursery products that assist with anti-desertification.
  2. Renewable Energy - it is undertaking to commence a Yellowhorn seedling and tree operation which would provide valuable Yellowhorn seeds and ultimately oil from such seeds for the manufacture of bio-diesel fuel and premium healthy cooking oil.

Maple Leaf is a wholly-owned foreign enterprise which allows the Corporation to control 100% of the direction and operations of the company in China while permitting the cash generated from operations in China to flow back to Canada.

Certain statements in this news release including (i) statements that may contain words such as "anticipate", "could", "expect", "seek", "may" "intend", "will", "believe", "should", "project", "forecast", "plan" and similar expressions, including the negatives thereof, (ii) statements that are based on current expectations and estimates about the markets in which Maple Leaf operates and (iii) statements of belief, intentions and expectations about developments, results and events that will or may occur in the future, constitute "forward-looking statements" and are based on certain assumptions and analysis made by Maple Leaf. Forward-looking statements in this news release include, but are not limited to, statements with respect to future capital expenditures, including the amount, nature and timing thereof; other development trends within the China's seedling industry; business strategy; expansion and growth of Maple Leaf's business and operations and other such matters. Such forward-looking statements are subject to important risks and uncertainties, which are difficult to predict and that may affect Maple Leaf's operations, including, but are not limited to: the impact of general economic conditions; industry conditions; government and regulatory developments; seedling product supply and demand; competition; and Maple Leaf's ability to attract and retain qualified personnel. Maple Leaf's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do transpire or occur, what benefits Maple Leaf will derive there from.

Maple Leaf maintains a forward-looking statement database which is reviewed by management on a regular basis to ensure that no material change has occurred with respect to such forecasts. The Company will publicly disclose such material changes to its forward-looking statements as soon as they are known to management.

Neither the TSX Venture Exchange or its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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