BEIJING, Aug. 22, 2016 /PRNewswire/ -- VisionChina Media
Inc. ("VisionChina Media" or the "Company") (Nasdaq: VISN),
China's largest out-of-home
digital television and advertising network on mass transportation
systems and the leading provider of urban mass transit Wi-Fi, today
announced that its consolidated variable interest entity,
VisionChina Media Group Co., Ltd. ("VisionChina Media Group") has
entered into a new equity transfer agreement and a new profit
compensation agreement (the "New Agreements") with Ledman
Optoelectronic Co., Ltd. ("Ledman") to sell 49% equity interests in
VisionChina New Culture Media Co., Ltd. ("New Culture"), the
operating entity of the Company's subway mobile TV advertising
business, for an aggregate consideration of RMB382.2 million (the "New Transaction").
Concurrently with signing of the New Agreements, VisionChina Media
Group, Shenzhen HDTV Industrial Investment Co., Ltd., another
consolidated variable interest entity of the Company, and Ledman
agreed to terminate the equity transfer agreement and profit
compensation agreement entered into among the parties in
February 2016 for sale of all of the
Company's subway mobile TV advertising business to Ledman.
"The sale of our subway mobile TV advertising business is a
critical and strategic step for VisionChina Media, and we remain
open in the future to sell the remaining 51% of our equity position
in New Culture. We believe the execution of the New Agreements
with Ledman will provide significant flexibility to satisfy our
working capital needs and allow us to focus our resources on the
fast growing WiFi business, and to further strengthen our leading
position in China's urban mass
transit WiFi market," commented Mr. Limin
Li, VisionChina Media's Chairman and Chief Executive
Officer, "We expect this transaction will be closed in the near
future and are confident that New Culture will be able to achieve
the profit targets described in the profit compensation
agreement."
Sale of Target Business
Pursuant to the new equity transfer agreement, Ledman will pay
RMB382.2 million to acquire 49%
equity interests in New Culture. Upon closing of the New
Transaction, Ledman will pay an installment of RMB321.2 million in cash to VisionChina Media
Group, and VisionChina Media Group will be required to use the
entire amount of the first installment payment to purchase shares
of Ledman held by Ledman's controlling shareholder ("Ledman
Shares") through a block trade within five business days after the
first installment payment. Within 10 business days (excluding time
required for the block trade described above) after the closing of
the New Transaction, Ledman will pay the remaining amount of
RMB61 million in cash. Upon
completion of the transactions contemplated by the new equity
transfer agreement, the Company expects to receive cash proceeds of
RMB61 million and indirectly own,
through VisionChina Media Group, a certain amount of Ledman's total
outstanding shares. The Ledman Shares will be subject to a lock-up
until May 31, 2019 and VisionChina
Media Group may not sell or otherwise dispose of more than 75% of
the Ledman Shares during the 12 months after the lock-up
expires.
VisionChina Media Group and all of its affiliates (including the
Company and its controlling persons) have agreed not to engage in
any business that is the same as or similar to or competes or may
compete with New Culture's subway mobile TV advertising business
for a period of eight years from the completion date of the New
Transaction. The management team members and other key employees of
New Culture have each entered into an employment contract with New
Culture for a term of five years or more, a confidentiality
agreement and a non-competition agreement pursuant to which such
persons have agreed to not engage in any business that is the same
as or similar to or competes or may compete with New Culture's
subway mobile TV advertising business for a period of five years
after closing of the New Transaction, or three years after the
termination of his or her employment with New Culture.
Profit Compensation
According to the new profit compensation agreement, in the event
that the consolidated net profits attributable to the shareholders
(excluding extraordinary items) of New Culture in any of the fiscal
years 2016, 2017 and 2018 (collectively, the "Covered Period") are
less than the profit target for such fiscal year - RMB60 million, RMB80
million and RMB100 million,
respectively (the "Profit Targets"), VisionChina Media Group will
compensate Ledman for the deficiency by returning a certain amount
of the Ledman Shares to Ledman. In the event that the Ledman Shares
are not sufficient to compensate for such deficiency, VisionChina
Media Group will be required to pay compensation in cash. The
compensation amount will be calculated based on a pre-determined
formula and subject to an aggregate cap in an amount equal to the
amount of the total consideration for the New Transaction.
Ledman will allocate 50% of the accumulated net profits of New
Century in excess of the total Profit Targets as a bonus to the
members of the management team of New Culture who are still
employed at New Culture at the end of the Covered Period.
The consummation of the New Transaction remains subject to the
requisite internal approvals of the relevant parties and regulatory
clearance by relevant regulatory authorities. There is no assurance
that these approvals or regulatory clearance will be obtained
within the expected time frame, or at all.
About VisionChina Media Inc.
VisionChina Media Inc. (Nasdaq: VISN) operates an out-of-home
advertising network on mass transportation systems, including buses
and subways. As of September 30,
2015, VisionChina Media's advertising network included
approximately 97,757 digital television displays on mass
transportation systems in 18 of China's economically prosperous cities,
including Beijing, Guangzhou and Shenzhen, as secured by exclusive agency
agreements or joint venture contract. VisionChina Media has the
ability to deliver real-time, location-specific broadcasting,
including news, stock quotes, weather and traffic reports, and
other entertainment programming.
In addition, VisionChina Media, through its consolidated
affiliate Qianhai Mobile, has secured exclusive concession rights
for bus Wi-Fi services in 30 cities across China, including Shanghai, Shenzhen, Guangzhou and Tianjin, covering approximately 80,000 buses.
Currently, Qianhai Mobile provides free Wi-Fi Internet services on
over 30,000 buses under the brand name "VIFI," with approximately
10 million registered users.
For more information, please visit
http://www.visionchina.cn.
About Ledman Optoelectronic Co., Ltd.
Ledman Optoelectronic Co., Ltd., a professional, leading
manufacturer in the Chinese LED industry and listed on the Shenzhen
Stock Exchange (300162.SZ), is committed to developing,
manufacturing and marketing high-quality, high-brightness LED
components, energy efficient LED lighting products, and indoor and
outdoor LED displays. Ledman's core business covers LED display,
LED lighting, LED components, LED energy saving and LED media.
Safe Harbor Statement
This press release contains forward-looking statements. These
statements constitute "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,
and as defined in the U.S. 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" and similar statements.
Among other things, the quotations from management in this press
release contain forward-looking statements. Such statements involve
certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements.
Further information regarding these and other risks is included in
the Company's filings with the U.S. Securities and Exchange
Commission, including its registration statement on Form F-1 and
its annual report on Form 20-F. The Company does not undertake any
obligation to update any forward-looking statement as a result of
new information, future events or otherwise, except as required
under applicable law.
For investor and media inquiries, please contact:
In China:
Ms.
Shuning Yi
Investor Relations Department
VisionChina Media Inc.
Tel: +86 134-2090-9426
E-mail: shuning.yi@visionchina.cn
In the United
States:
The Piacente Group, Inc.
Mr. Don Markley
Tel: +1 212-481-2050
E-mail: visionchina@tpg-ir.com
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SOURCE VisionChina Media Inc.
