BEIJING, Oct. 27, 2014 /PRNewswire/ -- China Digital
TV Holding Co., Ltd. (NYSE: STV) ("China Digital TV" or the
"Company"), the leading provider of conditional access ("CA")
systems and comprehensive services to China's digital television market, today
provided more details on its asset restructuring (the
"Restructuring"), as referred to in the press releases dated
June 13, 2014 and October 9, 2014, respectively. The Company
announced that its wholly-owned subsidiary Golden Benefit
Technology Limited ("Golden Benefit") has reached a supplementary
share transfer agreement (the "Supplementary Share Transfer
Agreement") to amend and supplement the share transfer agreement
entered into on October 9, 2014, and
a supplementary profit compensation agreement (the "Supplementary
Profit Compensation Agreement") to amend and supplement the profit
compensation agreement entered into on October 9, 2014, in each case with Shanghai
Tongda Venture Capital Co., Ltd. ("Tongda Venture") (Stock Code:
600647), a company listed on the Shanghai Stock Exchange.
Under the terms of the Supplementary Share Transfer Agreement,
the consideration for the acquisition by Tongda Venture of the 100%
equity interest in Beijing Super TV Co., Ltd. ("Super TV"), a
wholly-owned subsidiary of Golden Benefit, will be RMB3.2 billion, based on a valuation determined
by an independent third-party valuation agency. In addition, upon
the completion of the Restructuring, Tongda Venture's board of
directors will be composed of nine directors, including three
independent directors. Golden Benefit will be entitled to recommend
for appointment of two members to Tongda Venture's board of
directors, who will also be members of the Venture and Strategy
Committee of Tongda Venture's board of directors. Cinda Investment
Co., Ltd. ("Cinda Investment") has agreed to the appointment of one
or two professional managers (either recommended by Golden Benefit
or identified in a process in line with market practices) to the
senior management of Tongda Venture and to oversee business related
to Super TV.
Under the terms of the Supplementary Profit Compensation
Agreement, in the event that the net profit (before or after
adjustment for non-recurring gains and losses, whichever is less)
of Super TV in each of the fiscal years 2014, 2015 and 2016
(collectively, the "Covered Period") is less than the profit target
(being RMB190.10 million,
RMB283.67 million and RMB340.66 million for the fiscal years of 2014,
2015 and 2016, respectively) or there is any impairment loss at the
end of the Covered Period, Golden Benefit will be obligated to
compensate Tongda Venture for the deficiency or the impairment loss
by transferring its shares in Tongda Venture back to Tongda Venture
and/or cash, based on a pre-determined formula with such
compensations in aggregate being subject to a cap equal to the
amount of the Consideration.
Following the consummation of the Restructuring, the Company
will hold approximately 17.24% of the share capital of Tongda
Venture, which will represent a majority of its assets (excluding
cash and cash equivalents) and as a result, the Company may be
deemed an investment company under the U.S. Investment Company Act
of 1940 (the "Investment Company Act"), and will thus be subject to
related requirements and restrictions under the Investment Company
Act, including restrictions on the issuance of securities. However,
the Company intends to, and the board of directors of the Company
has authorized the Company to take actions so that the Company
will, be engaged primarily, as soon as reasonably possible and in
any event before the first anniversary of the consummation of the
Restructuring (the "Rule 3a-2 period"), in a business other than
that of investing, reinvesting, owning, holding or trading in
securities. As a result, as authorized by the board of directors of
the Company, the Company intends to rely upon Rule 3a-2 under the
Investment Company Act to avoid being deemed an investment company
during the Rule 3a-2 period.
There will be difficulties and uncertainties in completing the
Restructuring, which is subject to applicable approvals by the
shareholders of the relevant parties involved as well as regulatory
clearance (including that by the China Securities Regulatory
Commission, the PRC Ministry of Finance and the PRC Ministry of
Commerce), and the completion of a private placement by Tongda
Venture to raise funds to pay the consideration. The Restructuring
is expected to be subject to close scrutiny by the regulators amid
increasingly stringent standards for similar transactions. There is
no assurance that these approvals or regulatory clearance will be
obtained within an expected timeframe, or at all. The Restructuring
will terminate if it has not been completed by December 31, 2015.
Safe Harbor Statements
This announcement contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements are made under the "safe harbor"
provisions of the Private Securities Litigation Reform Act of
1995.
These forward-looking statements can be identified by
terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates," "may," "should" and
similar expressions. Such forward-looking statements include,
without limitation, statements regarding the comments by management
in this announcement about trends in the CA systems, digital
television, cable television and related industries in the PRC and
China Digital TV's strategic and operational plans and future
market positions. China Digital TV may also make forward-looking
statements in its periodic reports filed with the Securities and
Exchange Commission, in its annual report to shareholders, in press
releases and other written materials and in oral statements made by
its officers, directors or employees to third parties. Statements
that are not historical facts, including statements about China
Digital TV's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from projections contained or implied in any
forward-looking statement, including but not limited to the
following: competition in the CA systems, digital television, cable
television and related industries in the PRC and the impact of such
competition on prices, our ability to implement our business
strategies, changes in technology, the progress of the television
digitalization in the PRC, the structure of the cable television
industry or television viewer preferences, changes in PRC laws,
regulations or policies with respect to the CA systems, digital
television, cable television and related industries, including the
extent of non-PRC companies' participation in such industries, and
changes in political, economic, legal and social conditions in the
PRC, including the government's policies with respect to economic
growth, foreign exchange and foreign investment.
Further information regarding these and other risks and
uncertainties is included in our annual report on Form 20-F and
other documents filed with the Securities and Exchange Commission.
China Digital TV does not assume any obligation to update any
forward-looking statements, which apply only as of the date of this
press release.
About China Digital TV
Founded in 2004, China Digital TV is the leading provider of CA
systems and comprehensive services to China's expanding digital television market.
CA systems enable television network operators to manage the
delivery of customized content and services to their subscribers.
China Digital TV conducts substantially all of its business through
its PRC subsidiary, Beijing Super TV Co., Ltd., and its affiliate,
Beijing Novel-Super Digital TV Technology Co., Ltd., as well as
subsidiaries of its affiliate.
For more information please visit the Investor Relations section
of China Digital TV's website at http://ir.chinadtv.cn.
About Tongda Venture
Shanghai Tongda Venture Capital Co., Ltd. (Ticker: 600647) was
founded in 1992 and is listed on the Shanghai Stock Exchange. Cinda
Investment Co. Ltd. is currently Tongda Venture's largest
shareholder. Shanghai Tongda's business covers high- and
new-technology investment, industrial investment and asset
management, agricultural development, operation and domestic trade,
and food production and sales.
Investor Contact:
In China:
Nan Hao
Investor Relations Manager
Tel: +86-10-6297-1199 x 9780
Email: ir@chinadtv.cn
Brunswick Group
Tel: +86-10-5960-8610
Email: chinadigital@brunswickgroup.com
In the U.S.:
Brunswick Group
Tel: +1-212-333-3810
Email: chinadigital@brunswickgroup.com
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SOURCE China Digital TV Holding Co., Ltd.