China Wind Systems Inc. is a leading supplier of forged rolled wings to the wind power, industrial equipment, textile and energy industries in China. The company today announced the closing of a recent private placement with a group of investors through Barron Partners LP for 2.4 million shares of its series A preferred stock at $1 per share.
The company recently completed a one-for-three reverse split; as such, each share of series A preferred stock is currently convertible into one-third share of common stock. Through the purchase of 1.5 million China Wind’s shares, Barron Partners entered into a voting agreement with Jianhua Wu, China Wind chairman and CEO.
According to the press release, Wu has the right to vote the stock purchased in the financing and the underlying common stock as to all matters for which stockholder approval is obtained as long as Barron Partners or its affiliates own the stock.
China Wind said the proceeds will be used primarily to fund a new production line for electro-slag re-melted (ESR) products at the company’s forged products facility, which are used to increase the durability and quality of steel material.
“We anticipate that we will begin production of ESR forged products by mid-year 2010,” Wu stated. “We believe that our competitive position would be enhanced by manufacturing ESR products, which are high-end forged components for the wind power industry.”