BEIJING, Aug. 16 /PRNewswire-FirstCall/ -- American Dairy, Inc. (NYSE:ADY) (the "Company"), one of the leading producers and distributors of milk powder and soybean products in China, today announced that it has made a loan in the amount of approximately U.S. $10.0 million to an acquisition entity for the purpose of making a deposit or advance payment for the purchase of an equity interest in Ausnutria Dairy (Hunan) Company Ltd., a privately held distributor of high-quality nutritional, powdered milk and infant formula products based in Changsha, Hunan Province, China. The loan is intended to result in American Dairy acquiring a 49% interest in Ausnutria Dairy (Hunan) Company Ltd. through a series of proposed transactions that have yet to be consummated. The Company cautions that there can be no assurance or guarantee that the proposed transactions will be consummated. Upon completion of the proposed transactions, American Dairy plans to enter into a strategic partnership with Ausnutria with the goal of leveraging their respective brands and retail and distribution networks, and to generate manufacturing and cost synergies. Mr. Leng You Bin, Chief Executive Officer of American Dairy, stated, "Today's announcement demonstrates our plans to deploy capital to generate a return. We are positioning American Dairy to be the leading high quality, premium consumer brand company in China and today's announcement is another step in this long term plan." About Ausnutria Dairy (Hunan) Company Ltd: Ausnutria, located in Changsha, Hunan Province, China, is a leading distributor of high-end branded milk-powder and nutritional products to China. The Company concentrates on the top tier cities in China, marketing premium brands "Ausnutria" and "Allnutria". It strives to provide the highest quality products, and exercises vigorous quality control during the manufacturing process and across the entire supply chain, from farm to retail outlet. Ausnutria has a strong interest in research and development of infant formulas and, through the Australian Ausnutria Infant Nutrition & Immunity Center, engages in research aimed at the improvement of nutrition and the immune condition of Asian babies and the general populace. Ausnutria's unaudited financial results for 2006 include $15.9 million in revenue net after VAT, at a gross margin of 57.6 percent (margin net of VAT), and realized net income of approximately $3.0 million, a net margin of 19.0 percent. About American Dairy, Inc.: American Dairy, Inc. conducts operations in the People's Republic of China ("China") through its wholly owned subsidiary, Feihe Dairy. Founded in 1962, Feihe Dairy is one of the leading producers and distributors of milk powder and soybean products in China. Feihe Dairy is located in Kedong County, China, and has been in operation since 2001. American Dairy also has a milk powder processing plant, BaiQuan Feihe Dairy in Kedong County, and a milk powder processing plant in the city of QiQiHaEr, Heilongjiang Province. http://www.feihe.com/ Certain of the statements made herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time. DATASOURCE: American Dairy, Inc. CONTACT: U.S., Ashley Ammon MacFarlane or Bill Zima, +1-203-682-8200 (Investor Relations), or Asia, Xuyang Zhang, +86-10-8523-3087, all of Integrated Corporate Relations, Inc., all of American Dairy, Inc. Web site: http://www.feihe.com/

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