CCS Capital Inc. announces proposed qualifying transaction with Biochem Group
of China

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

Trading Symbol:TSXV:CSW.P

VANCOUVER, Feb. 23 /CNW/ - CCS Capital Inc. (TSXV:CSW.P) (the "Company"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), today announced that it has entered into a letter of intent relating to the acquisition of Beijing Biochem Hengye Science & Technology Development Co., Ltd. ("Biochem Hengye") and other related and associated companies ("Biochem Group"), all of which are private companies existing under the laws of China, (the "Acquisition"). This transaction will be effected through a wholly foreign-owned enterprise and is intended to constitute the Company's Qualifying Transaction (the "Transaction") and is not a Non Arm's Length Qualifying Transaction (as defined by the Exchange policies).

Overview of Biochem Group

Biochem Group is a leading lab solution provider in China. Through its subsidiaries, Biochem Group develops, manufactures and distributes medical diagnostic equipment and medical reagents throughout China. In addition, Biochem Group provides training, education, consultation and support services related to its suite of diagnostic products.

With the recently announced reforms to China's health care system focusing on providing affordable health care to all Chinese citizens (with an emphasis on rural areas), combined with the proposed RMB 850 billion (US$125 billion) investment into the Chinese healthcare system over the next three years, Biochem Group is well positioned to benefit from the increased demand for medical diagnostic services in China.

Biochem Group was established in 1993 in Guangzhou and has since expanded to other regions in China, and in 2003, with the growth of its business, Biochem Group relocated to Beijing. Currently, Biochem Group has a total of approximately 220 employees through its locations in Beijing, Shanghai and Guangdong. For the fiscal year ended December 31, 2009, Biochem Group had sales revenues of approximately RMB 152.8 million (CAN$23.3 million) and net profit of approximately RMB 22.9 million (CAN$3.5 million). All financial figures contained in this press release are unaudited.

Biochem Group's products and services are classified into four separate but complementary offerings: (i) in-vitro diagnostic equipment; (ii) medical reagents; (iii) maintenance, training, consultation and support services; and (iv) point-of-care technology diagnostic equipment.

Biochem Group's in-vitro diagnostic equipment business manufactures and distributes a wide range of medical diagnostic equipment for use in hospitals and research labs throughout China which is used to diagnose many forms of diseases and conditions, such as blood disease, kidney and liver functionality, electrolyte balance, and microbiology of the body. Biochem Group's medical reagents business produces and sells a variety of consumable medical reagents for use in various diagnostic services as a complementary product to its suite of in-vitro diagnostic equipment. The maintenance, training and support services business provides after-market support to hospitals and research labs that use Biochem Group's in-vitro diagnostic equipment. In addition, Biochem Group is developing unique products for the diagnostic services market in China, most notably, the Point of Care Technology or "POCT" kit, which is a dry-chemistry diagnostic kit for use in emergencies and natural disasters.

Biochem Group targets four distinct end markets: (i) large urban hospitals and research labs; (ii) rural diagnostic facilities; (iii) military users; and (iv) distributors and other customers.

Historically, Biochem Group has sold the majority of its equipment to large urban hospitals and research labs. These customers tend to order large, complex, high capacity, highly automated equipment. Biochem Group counts 539 of the top 1,000 hospitals in China amongst its customers, some of which have been dealing with Biochem Group for over 15 years. These customers are generally located in provinces in Eastern China, Southern China and select parts of Northern China, as these areas are the most economically developed and are therefore capable of supporting a market for advanced diagnostic equipment.

Going forward, Biochem Group intends to concentrate its sales effort on rural diagnostic facilities. To this end, Biochem Group has developed a suite of standard diagnostics equipment and reagents, hardware and software, for use in rural labs, as well as developing a service network in support of such labs (the "Total Lab Solution"). The Total Lab Solution includes basic in-vitro diagnostic testing equipment and complementary reagents such as haematology analyzers, coagulation analyzers, urine analyzers, biochemistry analyzers, and electrolyte analyzers. Depending on the combination of equipment chosen, the Total Lab Solution sells for between RMB 100,000 to RMB 150,000, with expected gross margin ranging from 35% to 50%, depending on the types and amounts of equipment purchased. Biochem Group has developed proprietary computer hardware and software that connects the diagnostic equipment and assists with analysis, allowing rural labs to conduct basic diagnostic tests without having patients travel long distances. As part of the Total Lab Solution, Biochem Group has begun to establish a network of service centres that are staffed with trained technicians that are able to provide support and a dependable supply of reagents to rural labs within the service area. As rural diagnostic facilities in China are typically underserviced and often lack even basic diagnostic capabilities, Biochem Group believes that it is uniquely positioned to capitalize on a first mover advantage, as they are the first company in China to identify and create a medical laboratory solution specifically tailored to service the approximate 50,000 rural hospitals throughout China. Since 2007, 86 rural hospitals have adopted Biochem Group's Total Lab Solution.

Overview of the Chinese Healthcare Industry

History

After the founding of the People's Republic of China in 1949, the Chinese government established a health care system whereby governments covered more than 90% of medical expenses for urban residents, while rural residents enjoyed simple but essentially free healthcare. When China began its economic reforms in the early 1980's, the healthcare system was dismantled as the country attempted to switch to a market-oriented system, which resulted in higher medical fees, making medical services less affordable to ordinary citizens. Other factors exacerbated this problem, such as the large development gap between urban and rural areas, low government funding, weak health care facilities at the community level, and increasing disease burdens. In 1997, China's State Council moved to rectify the previous concept that medical services were a type of commercial product and in the next ten years, a series of medical reforms, such as basic medical insurance for urban employees and a personal new cooperative medical scheme for farmers, were gradually implemented. However, the Chinese healthcare system continues to lag the developed world, as the government is dedicating significantly less resources to healthcare than all of the G8 nations per capita basis and a very severe gap remains between urban and rural healthcare quality, with 80% of government resources allocated to urban areas and only 20% allocated to rural areas. Furthermore, an unprecedented demographic transition is in progress with decreasing birth rates and an increasingly elderly population which will create new challenges and involve extensive restructuring of the health system.

Recent Reforms

In April 2009, in a move designed to reform the ailing medical system and to ensure fair and affordable health care services for all of China's 1.3 billion citizens, the Chinese government unveiled a blueprint to start a much anticipated reform. Under the plan, it is expected that by 2020, China will have a basic health care system providing safe, effective, convenient and affordable health services to urban and rural residents. The blueprint highlights the establishment of a basic health care system to cover all Chinese citizens to be formed on the basis of systems of public health, medical service, medical insurance and medicine supply. Selected highlights from the plan include:

    
    -   An investment of RMB 850 billion (US$125 billion) towards health care
        reform in the next three years;

    -   Prioritized development of small, local hospitals and clinics in
        urban and rural areas, which are often ill-equipped and understaffed;

    -   Improvement of small, local hospitals and clinics to provide more
        accessible and affordable services and to encourage patients to use
        such facilities, with comprehensive hospitals in large urban areas
        providing greater support to small, local hospitals in terms of
        personnel, expertise and equipment;

    -   Development of a diversified medical insurance system, with the ratio
        of those covered by a basic medical insurance plan expected to
        surpass 90% by 2011;

    -   Enhancement of the management of the operation of medical
        institutions, the planning of health service development, and the
        development of the basic medical insurance system;

    -   Increased investment by central and local governments in the public
        health sector, small hospitals and clinics, subsidies for public
        hospitals, and basic medical insurance systems; and

    -   Strengthening of the supervision of medical institutions, health
        insurance providers, and pharmaceutical companies and retailers.
    

These reforms and the corresponding increase in public spending are expected to make basic medical services more affordable and available to the Chinese population, thereby boosting the demand for medical devices. With priority given to the development of smaller hospitals and clinics in urban and rural areas, the purchase of cost-effective domestic medical diagnostic equipment will be encouraged. Biochem Group is expected to be well positioned to benefit from these reforms.

The Transaction

Prior to the completion of the Acquisition, it is expected that Biochem Group will complete a restructuring effected through a wholly foreign-owned enterprise involving the equity interests in certain key enterprises, including Biochem Hengye, currently controlled by Shiping (Wilson) Yao, a Chinese resident (the "Restructuring").

Concurrently with the Acquisition and subject to the approval of the Exchange, the Company intends to complete a private placement of common shares prior to or concurrently with the completion of the Transaction, subject to the approval of the Exchange, for aggregate gross proceeds of up to approximately CAN$5 million (the "Private Placement"). The net proceeds from the Private Placement will be used by the resulting issuer to fund its business plan, the expenses of the Transaction and general working capital and corporate purposes. Canaccord Financial Ltd. has been retained to act as lead agent and will be paid customary compensation for such agency services. It is expected that, with the concurrent Private Placement, the Company will be exempted from the Exchange's sponsorship requirement.

Pursuant to the terms of the Acquisition, the Company will acquire control of Biochem Group, and as consideration, subject to Exchange approval, the Company will issue such number of common shares representing approximately 78.3% of the issued and outstanding common shares of the Company after completion of the Acquisition (including the completion of the Private Placement). The consideration for the Acquisition will be settled between the Company and Biochem Group prior to executing the definitive agreement for the Acquisition (the "Definitive Agreement") based on the understanding that the current shareholders of the Company will own approximately 9.2% of Biochem Group at the closing of the Transaction (including the completion of the Private Placement).

The Company currently has 6,100,815 common shares issued and outstanding and 6,650,000 common shares on a fully-diluted basis. The Company currently has outstanding options exercisable for 549,185 common shares at an exercise price of CAN$0.10 per share.

Prior to the completion of the Transaction, it is expected that Biochem Group will complete a re-organization involving its operating companies, holding companies and beneficial owner, Mr. Shiping (Wilson) Yao.

Upon completion of the Transaction, it is expected that the resulting issuer will meet the public distribution requirements of an Exchange Tier 1 issuer. Shareholders of the Company and the resulting issuer are expected to comply with any special escrow restrictions as a means to satisfy Exchange minimum listing requirements, as well as to comply with applicable Exchange escrow policies. Subject to Exchange approval, a special warrant structure may also be implemented to ensure that the public distribution requirements are met. It is also expected that Shiping (Wilson) Yao will control the resulting issuer.

In addition, prior to completion of the Acquisition, it is intended that the Company will continue out of British Columbia and into the Cayman Islands or to such other jurisdiction as is mutually agreeable to the Company and Biochem Group (the "Continuation").

The approval of the Company's shareholders will be required for the Continuation and such other matters in support of the Transaction (including and without limitation, a change of name, if required). The principal shareholders of the Company, including and without limitation, Kim Oishi, Andrew Cook, and Allan Fabbro, are expected to enter into a voting support agreement to approve the Continuation and such other matters in support of the Transaction (including and without limitation, a change of name, if required) at a meeting of the Company's shareholders. The Company intends to call a shareholders' meeting to be held to consider such matters.

The completion of the Transaction will be subject to at least the following mutual conditions precedent:

    
    1.  the execution of the Definitive Agreement;

    2.  the approval of the Continuation and other matters in support of the
        Transaction (including and without limitation, a change of name, if
        required) by the requisite majority of the votes cast by the
        shareholders of the Company;

    3.  the receipt of all necessary regulatory, corporate and third party
        approvals, including the approval of the Exchange, and compliance
        with all applicable regulatory requirements and conditions in
        connection with the Transaction;

    4.  the maintenance of the Company's listing on the Exchange;

    5.  the confirmation of the representations and warranties of each party
        to the Definitive Agreement as set out in such agreement;

    6.  the absence of any material adverse effect on the financial and
        operational condition or the assets of each of the parties to the
        Definitive Agreement;

    7.  the delivery of standard completion documentation including and
        without limitation, legal opinions from Canadian, Cayman Islands and
        Chinese legal counsels, officers' certificates and certificates of
        good standing or compliance; and

    8.  other conditions precedent customary for a transaction such as the
        Transaction.

    In addition to the above listed mutual conditions precedent, the
completion of the Transaction is also subject to the following conditions
precedent in favour of Biochem Group:

    1.  prior to the execution of the Definitive Agreement, the principal
        shareholders of Biochem Group confirming, to their own satisfaction,
        acting reasonably, that they will not be subject to any significant
        adverse tax consequences as a result of the Transaction or otherwise;

    2.  at completion of the Transaction, except for any obligations to an
        agent appointed jointly by the Company and Biochem Group in
        connection with this Transaction, and except for any liabilities
        relating to certain budgeted costs for purposes of the Transaction,
        the Company will have no liabilities or obligations (contingent or
        otherwise) in excess of CAN$5,000, inclusive of liabilities relating
        to the fees and disbursements of its counsel appointed in connection
        with the Transaction;

    3.  at completion of the Transaction, the Company will have cash of not
        less than CAN$195,000 (including any amounts deposited or loaned to
        Biochem Group and not including the net proceeds of the Private
        Placement);

    4.  the completion of the Private Placement; and

    5.  the termination of the agreement between the Company and certain
        investor relations or third party agreements.
    

The conditions precedent in favour of the Company may be waived in whole or in part by the Company and the conditions precedent in favour of Biochem Group may be waived in whole or in part by Biochem Group.

The completion of the Transaction is expected to occur on the day that is the tenth business day following the satisfaction or waiver of the conditions precedent or such other date as mutually agreed to by the Company and Biochem Group, but in any event no later than June 30, 2010. If the Transaction is not consummated on or before June 30, 2010, or such other date as agreed to by the Company and Biochem Group, the terms of the Transaction will be terminated and be of no further force or effect. Each of the Company and Biochem Group will bear their own respective costs and expenses associated with the Transaction. The Company will pay, as a refundable deposit, CAN$90,000 to Biochem Group in order to further the Transaction. In addition to such refundable deposit, the Company may deposit (on a refundable basis) or loan (on a secured basis) up to CAN$135,000 to Biochem Group or its nominees to further the Transactions, subject to the satisfaction of Exchange requirements and approval. It is also expected that the Definitive Agreement will also include a break fee in favour of the Company in that if the Transaction does not complete due to a breach of the Definitive Agreement by Biochem Group, Biochem Group agrees to pay the Company all reasonable out-of-pocket expenses incurred by the Company in connection with the Transaction.

Overview of Management and the Board of Directors

Management

It is expected that the management of the resulting issuer will consist of Shiping (Wilson) Yao as President and Chief Executive Officer, Yuqiang Tang as Chief Operating Officer, Chao Zhang as the Vice-President of Finance, Bill Tunbrant as Vice-President of International Marketing, and Stephen Wortley as Secretary. The Chief Financial Officer of the resulting issuer is expected to be announced prior to the completion of the Transaction.

Shiping (Wilson) Yao is the current President and Chief Executive Officer of Biochem Group. Mr. Yao has approximately 20 years of experience in the medical equipment industry and is a member of China's National Standardization Technical Committee and of the Board of Renmin University of China. Yuqiang Tang is the current Vice Chief Executive Officer of Biochem Group. Mr. Tang is a key member of Biochem Group's management with extensive management experience including with Biochem Group's sales and marketing. Chao Zhang is the current Chief Financial Officer, Director of Finance and Executive Director of Biochem Group. Bill Tunbrant is a business executive and a board member of a number of European companies in various industries including the medical field. Stephen Wortley is a partner of the law firm of Lang Michener LLP with a focus on corporate finance and commercial law. Mr. Wortley acts for investment dealers and public companies including many China-based businesses.

Board of Directors

It is the intention of the Company and Biochem Group to establish and maintain a board of directors with a combination of appropriate skill sets that is compliant with all regulatory and corporate governance requirements, including any applicable independence requirements. The board of directors of the Company currently consists of three members. Upon completion of the Transaction, the board of the resulting issuer is expected to be reconstituted to comprise of seven members, Shiping (Wilson) Yao, Yuqiang Tang, Junjie Ma, Hong Chang, Bill Tunbrant, Paul Haber and Kim Oishi.

Information on Shiping (Wilson) Yao (who is also expected to be the President and Chief Executive Officer of the resulting issuer), on Yuqiang Tang (who is also expected to be the Chief Operating Officer of the resulting issuer), and on Bill Tunbrant (who is also expected to be Vice-President of International Marketing) is set out above. Jinjie Ma is the Vice-President of Renmin University of China, as well as the Deputy to the People's Congress of Haidian District and a Standing Member of the Chinese Leaders' Scientific Research Council. Hong Chang is an Affiliate Scientist in Toronto General Research Institute's Division of Cellular and Molecular Biology. Paul Haber is a member of the board of directors of Migao Corporation, South American Silver Corp., and High Desert Gold Corp., which are listed on the TSX, and he is also on the board of directors of IND DairyTech Limited, a company listed on the Exchange. Kim Oishi is the Senior Vice President, Finance and Business Development of Hanwei Services Corp., and a director of Zongshen PEM Power Systems Inc., both TSX-listed companies. Mr. Oishi is also a director to Cantronic Systems Inc. and Grand Power Logistics Group Inc., both listed on the Exchange.

About CCS Capital Inc.

CCS Capital Inc., a capital pool company within the meaning of the policies of the Exchange, was incorporated in British Columbia on July 7, 2009 and was listed on the Exchange on January 11, 2010. The Company does not have any operations and has no assets other than cash. The Company's business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction under the policies of the Exchange.

Trading in the common shares of the Company was halted on February 23, 2010 by the Exchange and is expected to remain halted until after the Exchange accepts and confirms the completion of the Transaction.

Except for statements of historical fact, all statements in this press release, including, but not limited to, statements regarding future plans, objectives and payments are forward-looking statements that involve various risks and uncertainties.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange has in no way passed on the merits of the proposed transaction and has neither approved or disapproved the contents of this press release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

    
                         FORWARD LOOKING INFORMATION
    

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company's current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release includes information relating to the Acquisition (including the structure of the Acquisition), the Transaction (including shareholder approval, principal shareholder support, and other terms such as the Continuation, the name change, and the completion or termination), the Private Placement (including its completion and the use of proceeds from the Private Placement), the principal owner, directors and management of the resulting issuer upon completion of the Transaction, the Chinese health care system reform (including Biochem Group's ability to benefit from such health care reform), the gross margins of the Total Lab Solution, and Biochem Group's business plan (including sales to medical facilities in rural areas of China and its ability to capitalize on this market niche). Such statements and information reflect the current view of the Company with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: risks associated with the completion of the Transaction and matters relating thereto; and the delisting of the Company from the Exchange due to its failure to complete a Qualifying Transaction within the time period set in the policies of the Exchange; and risks associated with the marketing and sale of securities, the need for additional financing, reliance on key personnel, the potential for conflicts of interest among certain officers or directors with certain other projects, and the volatility of the Company's common share price and volume. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.

There are a number of important factors that could cause the Company's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others, risks related to Biochem Group's business such as failure of the business strategy, stable supply prices, demand and market prices for medical device products, and government licensing; risks related to Biochem Group's operations, such as additional financing requirements and access to capital, reliance on key and qualified personnel, insurance, competition, intellectual property and reliable supply chains; risks related to Biochem Group and its business generally such as potential exposure to tax under Canadian income tax, regulations of the People's Republic of China (the "PRC") relating to offshore special purpose companies, recent PRC regulations relating to cross-border mergers and acquisitions, PRC health care reform, product liability, environmental protection, currency exchange rates and conflicts of interest; and risks related to doing business in the PRC such as tax, repatriation of profit and currency conversion, acquisition and appropriation of land use rights, foreign investment, permits and business licenses, employment contracts, government intervention, shareholders' rights and enforcement of judgments and a developing legal system.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. While the Company may elect to, it does not undertake to update this information at any particular time.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

    
                     MARKET DATA AND INDUSTRY FORECASTS
    

This press release includes market and industry data and forecasts that have been obtained from third-party sources and publicly available information, as well as industry data prepared by Biochem Group's management on the basis of its knowledge or and experience in the industry in which Biochem Group operates. The knowledge of the industry has been developed through Biochem Group management's experience and participation in the industry. Management believes that its industry data is accurate and that its estimates and assumptions are reasonable, but there can be no assurance as to the accuracy or completeness of this data. Third-party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. Although management believes it to be reliable, the Company has not independently verified any of the data from third-party sources referred to in this press release or analyzed or verified the underlying studies or surveys relied upon or referred to by source sources, or ascertained the underlying economic assumptions relied upon by such sources.

%SEDAR: 00028950E

For further information: Kim Oishi, Chief Executive Officer and Chief Financial Officer, Telephone: [phone], Email: [email protected]