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China Shoe Holdings inks ELC accord with Magellan Global Fund

25
Mar '08

China Shoe Holdings announced that it has entered into an equity line of credit agreement ("ELC") with Magellan Global Fund, LP (Magellan) that provides China Shoe with the option to draw down up to $2 million of equity funding by Magellan at any time over a two year period commencing with the effectiveness of a registration statement to be filed by the company.

China Shoe management is pleased to point out that the terms of the financing are beneficial to the long-term growth on the company. Draw downs on the ELC will be at China Shoe's sole discretion.

If China Shoes elects to make a draw under the agreement, the shares to be issued will be priced at an 8% discount to the average closing bid price of China Shoe's shares during the pricing period which is at the time of the draw with a "floor price" of $0.07.

Because there is a floor price, the company will not be subject to a "death spiral" or other dilutive terms. In addition, there are no warrants, stock options or any type of preferred securitization, keeping the transaction simple and straight-forward.

In connection to this transaction, China Shoe has paid to Magellan a non- refundable fee of $40,000 through the issuance of an additional 571,429 restricted shares.

A registration statement relating to these securities will be filed in the short future. Upon effectiveness of the registration statement, an additional fee of $40,000 will be payable to Magellan.

"We aredelighted with the agreement with Magellan Global Fund. The completion of this funding will enable our continual expansion, especially on the execution of our retail strategy," according to Mr. Gu XianZhong, Chairman and CEO of China Shoe.

"In addition, we believe the terms of the equity line of credit agreement is competitive and it provides us with excellent financial flexibility for the future while minimizing dilution to shareholders."

China Shoe Holdings Inc

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