Providential Holdings Acquires Majority Stake in a Leading Chinese Tool Manufacturer
FOUNTAIN VALLEY, CA -- (MARKET WIRE) -- 06/15/04 -- Providential Holdings, Inc. (OTC BB: PRVH) (Berlin Stock Exchange: PR7, WKN 935160) (www.phiglobal.com) today announced that it has signed an agreement to acquire a 60% ownership stake in Yutian Saw Corporation (YTSAW), www.YTSAWBLADES.com (English) and www.ytsaw.com (Chinese), a leading Chinese manufacturer of circular saw blades.
According to the terms of the transaction, expected to be closed by June 30, 2004, Providential Holdings acquires 60% of the common stock of Yutian Saw Corporation in exchange for $45 million in short-term notes. As part of the agreement, Providential will assist YTSAW in becoming a publicly-traded company in the US and Europe within nine months following the closing of the transaction. In addition, Providential will help market YTSAW's products outside of China and facilitate YTSAW's access to the Western capital markets for funds needed to expand rapidly into the international markets.
At the current exchange rate of 8.2766 Chinese Yuan per US dollar, YTSAW's revenues and net profits were $81,584,225 and $17,937,317 for the year ended 2003, as compared to $68,264,745 and $14,377,685 for the year ended 2002, respectively. While revenues grew 19.51% from 2002 to 2003, net profits grew 24.76% during the same period. For the first five months of 2004, revenues were $40,717,200 and net profits were $9,303,335, an equivalent of $97,721,286 and $22,328,000, respectively, on an annualized basis for 2004. As the majority owner of YTSAW, Providential Holdings will be able to recognize YTSAW's revenues and profits on its consolidated financial statements. At the average Price-Earnings ratio of 17.8 for the Appliance and Tool industry, YTSAW's market capitalization is expected to reach over $395,000,000 once it becomes a publicly-traded company and contribute an additional $237,000,000 to Providential's overall valuation.
YTSAW is Asia's largest steel rotary saw blade manufacturer. Its products range from the household saw blades to those industrial blades measuring more than six-feet in diameter and costing thousands of dollars. These larger blades, hardened alloyed or diamond tipped, are used to cut concrete blocks, canal channels, trenches, metal bars, plates, timber and rocks. YTSAW currently employs more than 600 workers and its fixed assets include land, buildings, and machine tools from Japan, Germany and USA. Its mega-watt carbon dioxide lasers cut and anneal industrial saw blades in round-the-clock production runs. The company occupies a land of about 28 acres with a production area of about 800,000 square feet in Hebei, China, about 100 miles from Beijing, the capital.
Henry Fahman, Chairman and CEO of Providential Holdings, commented, " YTSAW is a very profitable company. They have an excellent management team and R&D staff. Their products are in high demand in China because of the housing and infra-construction boom. We will contribute to their growth by bringing their products to non-Chinese markets, take them public in the US and Europe in the near future, and facilitate their access to the Western capital markets. As we are uniting Chinese and US corporations together to create more value, YTSAW will undoubtedly bring significant improvements to PRVH's financial results. In addition, we are currently in the final stages of negotiations with a couple more Chinese companies of comparable sizes."
About Providential:
Providential Holdings, Inc., a diversified service and manufacturing company, focuses on selective technologies, financial services, international markets and special situations. Products and services include mobile entertainment systems, information technology, identification technology, infrastructure development, and telecommunications. The Company also engages in trade commerce and mergers and acquisitions, especially in the U.S. and emerging overseas markets with high potential for growth. URL: http://www.phiglobal.com.
Safe Harbor: Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results in the future to differ materially from forecasted results. These risks and uncertainties include, among other things, the company's ability to attract qualified management, raise sufficient capital, and effectively compete against similar companies.
Contact:
Providential Holdings
Henry Fahman
714/849-1577
henry@phiglobal.com
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