China BCT Enters Into an Agreement to Raise $30 Million

LIUZHOU CITY, China, Jan. 18, 2011 /PRNewswire-Asia-FirstCall/ -- China BCT Pharmacy Group, Inc., (OTC Bulletin Board: CNBI), ("China BCT" or the "Company"), a leading pharmaceutical distributor, retail pharmacy, and manufacturer of pharmaceutical products in Guangxi Province, China, today announced that it has entered into an agreement with Milestone Longcheng Limited, a private equity firm, pursuant to which Milestone will purchase 9,375,000 shares of the Company's Series A Convertible Preferred Shares (the "Preferred Shares") for an aggregate purchase price of $30 million.

The Preferred Shares carry a dividend of 5% and are convertible initially into an equal number of shares of China BCT Pharmacy's Common Stock at an initial conversion price of $3.20 per share. Under the agreement, Milestone will have the right to name one director and to recommend an additional independent director to the Company's board, which will increase to seven directors upon closing of the transaction. The agreement also provides that Milestone will have consent rights with respect to certain operating matters. The holders of Preferred Shares will have pre-emptive rights with respect to future offerings and have voting rights with the Common Stock as well as separate voting rights with respect to certain extraordinary transactions. After issuance, the Preferred Shares will represent 18.5% of the outstanding share capital of the Company. The transaction is subject to a number of closing conditions. The parties anticipate that the transaction will close approximately 30 days after signing.

"The transaction with Milestone provides us with additional capital to support our growth initiatives, including the expansion of China BCT's retail pharmacy business. We currently see a number of attractive acquisition opportunities in Guangxi Province and surrounding regions. We are very pleased to have developed this working relationship with Milestone and we plan to carefully deploy this new capital to create long term value for our shareholders," commented Hui Tian Tang, Chairman and CEO of China BCT Pharmacy.

About China BCT Pharmacy Group

China BCT Pharmacy is engaged in pharmaceutical distribution, pharmacy retailing, and the manufacture of pharmaceuticals products through its subsidiaries, Guangxi Liuzhou Baicaotang Medicine Limited, Hefeng Pharmaceutical Co. Limited, and Guangxi Liuzhou Baicaotang Medicine Retail Limited, each located in Guangxi province, China. The Company operates a large regional retail network in Guangxi province, consisting of 170 directly owned retail stores in Guangxi province and currently over 8,000 products are distributed through the Company's wholesale distribution network. For more information, please visit http://www.china-bct.com.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including: changes from anticipated levels of sales; future international, national or regional economic and competitive conditions; changes in relationships with customers; access to capital, including changes in anticipated timing and closing of the Company's agreement with Milestone Longcheng Limited; difficulties in developing and marketing new products and services; marketing existing products and services; customer acceptance of existing and new products and services; and other factors detailed in the Company's periodic filings with the Securities and Exchange Commission (http://www.sec.gov). Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.

SOURCE China BCT Pharmacy Group, Inc.

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