June 2, 2011
Morgan Stanley grants Yongye with US$50 million fund
Morgan Stanley's Asian private equity arm has agreed to make a US$50 million investment Yongye International Inc., a Chinese plant and animal feed maker, the company said Tuesday (May 31).
Yongye shares jumped 45%, adding US$1.70 to US$5.45 in morning trading after rising as high as US$6.15 in earlier trading.
Yongye intends to use the proceeds to expand its production capacity, repay bank debt and for general corporate purposes.
In connection with the investment, Yongye has vowed to meet some multi-year profit goals and has agreed to have Home Sun, the managing director of Morgan Stanley Private Equity Asia, join Yongye's board of directors.
The deal is expected to close on June 10. The investment will consist of the purchase of US$50 million of preferred shares that can be converted into common stock at an initial conversion price of US$8.80 per share.
The conversion price could also be raised or lowered up to a maximum of US$15 per share based on the company's cumulative net income between 2011 and 2014.