InterAmerican Acquisition Group & China New Cities Development Announce
2009-09-22

Amended S-4 Filing

Third Quarter and Nine-Month Financial Results for Acquisition Target

Updated Pro Forma Earnings Guidance for 2008 of $1.15 per share

San Diego, CA, December 29, 2008 – InterAmerican Acquisition Group Inc. (OTC BB: IAQG; IAQGW; IAQGU) and its wholly-owned subsidiary, CNC Development Ltd. (“China New Cities Development” or “CNC”) announced the filing on December 19, 2008 of an updated S-4 registration statement pertaining to the acquisition of Sing Kung Limited (“Sing Kung” or the “Company”), a leading integrator of planning, financing and construction of turnkey infrastructure projects for municipalities in the People’s Republic of China (“PRC”).  The filing incorporates unaudited third quarter and nine month financial results for both InterAmerican Acquisition Group and the Company as well as pro forma financial statements for the combined enterprise. 

Sing Kung Third Quarter 2008 Highlights:

• Revenues - -  $9.6 million
• Pretax operating income - -  $6.2 million  (64.7% of sales)
• Net income - - $4.6 million (48.1% of sales)
• BT project backlog - - $485 million at September 30, 2008; over $900 million with new contract awards in November

“We are pleased to report another quarter of solid profitability, despite a slower than expected initial ramp-up of a multi-year, multi-phase development for the Zhengding municipal government,” said Dr. Jianjun Shi, Sing Kung’s CEO. “Our work on other projects scheduled for 2008 was substantially complete at the end of June, but we were not able to commence construction in Zhengding until early September due to last-minute adjustments in project specifications and design elements.  Since implementation on the highly-profitable first-phase road network for Zhengding began, we have been meeting our revenue targets of roughly $10 million/month.  We expect this run-rate to nearly double in January and beyond when we start building a new bridge connecting Zhengding with the provincial capital city of Shijiazhuang.  With funds available from the CNC transaction we expect to be able to sustain the higher rate of revenue generation targeted for the first quarter of 2009.  Project work next year is slated to encompass continued development through all four quarters at Zhengding, the second phase of the Jiaohe project during the second and third quarters and the start-up of construction on the newly awarded multi-phase Wengyuan county development in the second half of the year.” 

Selected Sing Kung Financial Statement Information

 Discussion of 2008 Three-Month and Nine-Month Results

The reduced revenue run-rate of $9.6 million for the third quarter ended September 30, 2008 ascompared with $54.6 million for the nine-month period was due to the fact that construction was ongoing during only one month of the third quarter caused by the delayed start-up of the Zhengding project.  The gross margin for the project-in-progress during the third quarter was approximately 70%, as compared with about 40% for the cumulative nine-month period, because of the high profitability of the road-network project phase of the current project-in-progress.  The gross margin performance of the third quarter is anticipated to decline to approximately 60% in the remainder of 2008, because of higher costs involved in the late-stage construction of the road-network in the fourth quarter. 

SG&A costs increased substantially to nearly 5% of revenue during the third quarter, as compared with 1% for the nine-month period.  This sharp rise was primarily the result of increased management compensation as the Company has moved to augment its functional and project management ranks in response to increased levels of project activity.  Although the Company’s management infrastructure continues to grow, SG&A as a percentage of revenue is expected to ecline in the fourth quarter due to the high levels of contract activity in all three months. 

Operating income for the third quarter was $6.2 million as compared with $21.3 million for the first nine months.  As a result of the higher gross margins discussed above, however, the operating income margin for the three-month period ending September 2008 was much higher, at about 65%, than the cumulative operating margin for the nine-month period, about 39%. 

The tax provision recorded in the financial statements for the third quarter is at the maximum statutory rate of 25% of operating income as compared with about 2.7% for the first half.  This increase is a reflection of the fact that the company is still negotiating tax concessions with local governments in connection with the Zhengding project.  Although it expects to be able to apply a lower rate to net income earned from this project, there is no assurance that it will be able to do so until such an arrangement is finalized.   The impact on the nine-month results of accruing the maximum tax rate during the third quarter is an average rate effective tax rate of 9.4% of operating  income. 

Financial Condition/Liquidity

As of September 30, 2008, Sing Kung had total assets of $78.2 million, including $11.9 million in cash.  Total equity reached $34.5 million.  The Company’s current payables commitments include deferred payments to subcontractors that are timed to coincide with expected collections of BT contract receivables or that are due following the anticipated closing of the business combination with CNC early in the first quarter of 2009.  Upon completion of the CNC transaction the Company anticipates that it will have sufficient liquidity to meet its 2009 business plan. 

Business Outlook/Backlog

The PRC government announced a sweeping economic stimulus plan last month aimed at bolstering its slowing economic growth rate over a two-year period.  Amounting to more than 7% of the country’s GDP on an annual basis, actions included  approximately $585 billion in central government spending commitments, approximately half that amount in local commitments and various initiatives to bolster real estate development including reduced transfer and business taxes, and borrowing rates and loan-to-value requirements. Most of the direct expenditure is targeted at infrastructure development outside the country’s mega-cities.  This package is the largest economic stimulus effort ever undertaken by the Chinese government and is expected to strengthen municipal fiscal capacity and facilitate accelerated collection of the Company’s BT project receivables.

“Our goal is to become China’s leading provider of urban infrastructure development solutions for local governments,” stated Dr. Shi. “If the government’s recent stimulus initiatives allow us to accelerate our cash conversion cycle, our project pipeline will support growth well above previously forecast levels.  Given the revised structure announced for the CNC transaction, we feel confident that we can meet our previously stated pro forma earnings target for 2008 of $1.15 per share and if we are successful negotiating a lower effective tax rate, this could reach 1.18 per share.”

During the third quarter the Company signed a master agreement with the government of Wengyuan County for a 5-year project having a total value of RMB 3 billion (estimated to be $450 million when complete). This new project is expected to contribute approximately $40 million in revenue in 2009.  The addition of the Wengyuan project brought Sing Kung’s total project backlog to more than $900 million as of the beginning of December after taking into account completed progress on projects previously awarded.  Other large multi-phase projects are in active negotiation and the potential exists to expand the total project backlog for existing customers.

About InterAmerican Acquisition Group and CNC Development

InterAmerican Acquisition Group Inc. was recently formed for the purpose of acquiring, through a merger, stock exchange, asset acquisition or other similar business combination, an operating business.  It formed a subsidiary, CNC Development Ltd. for the sole purpose of effecting a redomestication merger and acquiring Sing Kung.  InterAmerican Acquisition Group is located in San Diego, California with offices at 2918 Fifth Ave., Suite 209. Additional information about both companies is available on the their website: http://iaaginc.com or in the public filings available from the SEC website: (http://www.sec.gov)

About Sing Kung Limited

Sing Kung Limited (BVI), through its PRC operating subsidiary, forms and leads consortiums to deliver comprehensive city planning and infrastructure build-outs to selected municipalities throughout China. The Company’s “Build-Transfer” business model allows local governments to overcome financial and project management constraints and to quickly unlock economic development potential and enhance municipal property values.  Sing Kung employs unique capabilities and exceptional strategicrelationships to deliver turnkey solutions to progressive cities that are expanding or redeveloping urban cores to meet explosive growth.  In addition to supporting its clients with municipal development strategies, detailed planning and fully-financed project implementation, the Company also offers municipal government leaders support in obtaining long-term replacement financing and later-phase commercialization and project marketing. For more information, please refer to http://www.cncdev.com.

Forward-looking Statements

Additional information regarding IAG, Sing Kung and China New Cities Development is contained in the Form S-4 registration statement that IAG and China New Cities Development jointly filed with the Securities and Exchange Commission on December 19, 2008. A copy of the filing in its entirety is available at http://www.sec.gov.  This registration statement relating to the securities of IAG and CNC has not yet become effective. These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, about IAG, Sing Kung and their combined business after completion of the proposed acquisition. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of IAG's and Sing Kung's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which Sing Kung is engaged; cessation or changes in government incentive programs: fluctuations in customer project schedules and requirements; intensity of competition from other providers of urban and infrastructure planning and construction; general economic conditions; geopolitical events and regulatory changes, as well as other relevant risks detailed in the filings with the Securities and Exchange Commission, and the registration statement on Form S-4 of IAG and its BVI subsidiary, CNC Development Ltd. (SEC File No. 333-152977 and 333-152977-01, respectively). The information set forth herein should be read in light of such risks. Neither IAG nor Sing Kung assumes any obligation to update the information contained in this press release.

In connection with the pending transaction, IAG and China New Cities Development filed with the SEC a registration statement on Form S-4 containing a proxy statement/prospectus for the stockholders of IAG. The stockholders of IAG are urged to read the proxy statement/prospectus, when it is available, as well as all other relevant documents filed or to be filed with the SEC, because they will contain important information about Sing Kung, China New Cities Development, IAG and the proposed transaction. The final proxy statement/prospectus will be mailed to stockholders of IAG after the registration statement on Form S-4 is declared effective by the SEC. IAG stockholders will be able to obtain the registration statement (and proxy materials contained therein) and any other relevant filed documents for free at the SEC's website (http://www.sec.gov ). When effective, these documents can also be obtained without charge from IAG by directing a request to Ana Ponce, c/o InterAmerican Group, 2918 Fifth Ave., Suite 209, San Diego, CA 92103.

China New Cities Development, IAG and their respective directors and officers may be deemed to be participants in the solicitation of approvals from IAG stockholders in respect of the proposed transaction. Information regarding IAG's participants will be available in the proxy statement /prospectus. Additional information regarding the interests of such participants will be included in the registration statement containing the proxy statement/prospectus.

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