CDC Corporation Provides Update on Evolution Capital Management Matter
November 17 2010 - 8:25AM
Business Wire
CDC Corporation (NASDAQ: CHINA), a leading China-based
value-added operator of, and growth investor in, hybrid
(SaaS/On-Premise) enterprise software, IT Services, and New Media
assets, today announced an update on the legal action current
pending between the company and Evolution Capital Management.
As background, in March 2010, CDC Corporation filed a lawsuit
against Evolution alleging breach of non-disclosure agreements,
breach of the note purchase agreement relating to Notes, breach of
the Notes, and tortious interference with business relations,
seeking a recovery in excess of $295.0 million. On April 28,
2010, the Court denied Evolution’s motion for summary judgment in
its suit against the company. Evolution has also asserted claims
against CDC Corporation, and in October, 2010, Evolution filed a
motion to amend its complaint to assert claims against the company
and its subsidiaries, CDC Software International, CDC Software
Corporation and CDC Delaware Corporation. Evolution seeks to
recover compensatory and punitive damages, pre-judgment interest,
costs and reasonable attorney’s fees, in excess of $60.0 million.
Both matters are currently in discovery.
CDC Corporation believes Evolution has taken substantial steps
to harm the company and its prospects by, among other things,
interfering with CDC’s management and operations, and by actively
pursuing other opportunities that were detrimental to CDC and its
shareholders and that the company believes were inconsistent with
its obligations as an unsecured note holder. The company also
believes that Evolution’s obtaining a preliminary injunction in
this matter, and taking the unusual step of issuing a press
release, further illustrates its intent to interfere with the
company and its operations.
“We continue to be disappointed and frustrated by Evolution’s
refusal to agree with us on terms for a settlement of both of these
matters, and also that Evolution has continued to distract our
management and impede, among other things, our plans to return
value to our shareholders through dividends to CDC Corporation
shareholders, which is blocked by the preliminary injunction,” said
Peter Yip, CEO of CDC Corporation. “This matter is still in the
early stages of discovery, and we intend to continue to vigorously
pursue our rights and to seek damages to which we believe we are
entitled by all means legally available to us, as well as oppose
this ruling. Based on what we have discovered so far, we are
considering amending our claims against Evolution by adding
additional defendants and claims. We have also been approached by
certain CDC Corporation shareholders who believe Evolution’s
actions have harmed the company’s business and, as a result, these
shareholders are evaluating their options with respect to a
potential suit against Evolution.”
Yip added, “As our Non-GAAP cash and cash equivalents were
$107.0 million as of the end of the second quarter of 2010, we
believe we have enough liquidity to meet any obligations we may
have under the Notes. We will continue our efforts to have a good
faith, open dialogue with Evolution on the topic of settling our
respective claims against each other.”
CDC Corporation plans to oppose a November 10, 2010 ruling by
the Supreme Court of New York granting Evolution Capital
Management, the last remaining non-affiliated holder of the
company’s unsecured convertible debenture (Notes), a preliminary
injunction in Evolution’s suit against the company. The preliminary
injunction requires CDC to refrain, while Evolution’s suit against
the company is ongoing, from unilaterally nullifying the covenants
in the note purchase agreement relating to the Notes, and from
repudiating certain affirmative and negative covenants in the note
purchase agreement.
About CDC Corporation
CDC Corporation is a China-based value-added operator of, and
growth investor in, hybrid (on premise and SaaS) enterprise
software, IT, and new media businesses. The company pursues two
value-added investment strategies. The first strategy includes
actively managing majority interests in its core portfolio of
hybrid enterprise software, IT services and New Media businesses,
adding value by driving operational excellence, top-line growth and
overall profitability. The second strategy includes identifying and
executing on opportunities to co-invest with leading venture
capital and private equity funds through minority interests in
fast growth companies in emerging markets related to CDC
Corporation’s core assets. This second strategy, which complements
the first, helps to mitigate risk and enhance deal flow for the
company. CDC Corporation expects to deliver superior returns and
additional value for its shareholders through these strategies, as
well as through its plans to declare and pay regular dividends in
the form of registered shares of its publicly listed subsidiaries
and other assets. For more information about CDC Corporation
(NASDAQ: CHINA), please visit www.cdccorporation.net.
Cautionary Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995, including statements relating to, among other
things, our beliefs regarding our beliefs regarding the Evolution
litigation, including the outcome thereof, our beliefs regarding
our cash position and any obligations we may have under the Notes,
and other statements which are not historic fact. These statements
are based on management's current expectations and are subject to
risks and uncertainties and changes in circumstances. There are
important factors that could cause actual results to differ
materially from those anticipated in the forward-looking
statements, including the following: (a) the ability to realize
strategic objectives by taking advantage of market opportunities in
targeted geographic markets; (b) the ability to make changes in
business strategy, development plans and product offerings to
respond to the needs of current, new and potential customers,
suppliers and strategic partners; (c) the ability to integrate
operations or new acquisitions in accordance with the company's and
its subsidiaries’ business strategies; (d) the effects of
restructurings and rationalization of operations; (e) the ability
to address technological changes and developments including the
development and enhancement of products; (f) the ability to develop
and market successful products and services; (g) the entry of new
competitors and their technological advances; (h) the need to
develop, integrate and deploy products and services that meet
customer's requirements; (i) the possibility of development or
deployment difficulties or delays; (j) the dependence on customer
satisfaction with the company's and its subsidiaries’ products and
services; (k) continued commitment to the deployment of the
company’s and its subsidiaries’ products and services, including
enterprise software solutions; (l) risks involved in developing
software solutions and integrating them with third-party software
and services; (m) the continued ability of the company's enterprise
software solutions to address client-specific requirements; (n)
demand for, and market acceptance of, new and existing enterprise
software and services and the positioning of the company's
solutions; (o) the popularity and market acceptance of CDC Games'
existing and new games; and (p) the continued growth of the online
games industry in our target markets, including China. Further
information on risks or other factors that could cause results to
differ is detailed in our filings or submissions with the United
States Securities and Exchange Commission, and those of our
ultimate parent company, CDC Corporation. All forward-looking
statements included in this press release are based upon
information available to management as of the date of the press
release, and you are cautioned not to place undue reliance on any
forward looking statements which speak only as of the date of this
press release. The company assumes no obligation to update or alter
the forward looking statements whether as a result of new
information, future events or otherwise. Historical results are not
indicative of future performance.
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