China Digital Communication Group Executes Agreement to Acquire Shenzhen Zhuo Tong
February 16 2006 - 7:00AM
PR Newswire (US)
--Brings Unaudited Revenues of $5.4M and Unaudited Net Income of
$1.9M to CHID-- LOS ANGELES and SHENZHEN, China, Feb. 16
/PRNewswire-FirstCall/ -- China Digital Communication Group ("China
Digital") (OTC:CHID) (BULLETIN BOARD: CHID) , one of the fastest
growing battery components manufacturers in China, announced today
that it has entered into an agreement to acquire UPE (Far East)
Limited ("UPE"), which operates through its wholly owned subsidiary
company, Shenzhen Zhuo Tong Power Supply Industry Co., Ltd. ("Zhuo
Tong"). Zhuo Tong is one of the leading power suppliers to the
domestic market (China) and is a pioneer of third generation (3G)
power supply technologies and equipment. In 2005, Zhuo Tong had
unaudited revenues of $5.4 million USD, and unaudited net income of
US$1.85 million. The closing of the acquisition is subject to
various conditions, including the completion of an audit of Zhuo
Tong's financial statements, the completion of financial due
diligence on UPE and Zhuo Tong by China Digital and the receipt of
customary consents, approvals and opinions. Pursuant to the
acquisition agreement, China Digital will acquire 100% of UPE in an
all stock transaction valued at approximately US$11.1 million.
China Digital will issue 18.5 million shares to the shareholders of
UPE in exchange for all of the shares UPE. Upon completion of the
acquisition, the shareholders of UPE will own approximately 25% of
China Digital. Changchun Zheng, CEO and Chairman of China Digital,
stated, "The acquisition of Zhuo Tong is a pivotal step in
transforming China Digital from a mobile phone components
manufacturer into a 3G technology and equipment system provider.
Zhuo Tong leads the 3G power supply market in China with an
impressive customer base and technological intellectual property,
and will be immediately accretive to our earnings. The combination
of Zhuo Tong and our battery shell manufacturing subsidiary
Shenzhen E'Jenie provides a synergistic platform to drive
aggressive future growth." Zhuo Tong provides power supply
technology and equipment to China's "Big Four" -- China Mobile,
China Unicom, China Telecom, and China Netcom. Zhuo Tong serves
large-scale commercial and industrial telecommunication operators;
electrical power supply system providers, electricity utilities and
other ancillary service providers. Zhuo Tong is ISO9001 quality
control certified; holds a TLC license for producing
telecommunication equipment and components in China; and is a
member of the Chinese Power Source Academic Society. About Shenzhen
Zhuo Tong Power Supply Industry Co. Shenzhen Zhuo Tong Power Supply
Industry Co., Ltd. is specialized in manufacturing and distributing
high frequency power supply products; reversible power supply
products; and other related power supply products including an
Intelligent Temperature Control System for the commercial computer
industry. Zhuo Tong has promulgated the TLC license for producing
telecommunication equipment and components in China. Shenzhen Zhuo
Tong partners include Germany Phoenix Electric Co. and American
Luminous Network Co. Shenzhen Zhuo Tong's major customers are
communication equipment producers for the IT, power, and radio and
television broadcast industries. For more information, visit
http://www.zhuotong.com/. About China Digital Communication Group
China Digital Communication Group, through its Shenzhen E'Jenie
subsidiary, is a rapidly growing manufacturer of battery shells and
related technology for use in electronic products, primarily mobile
phones. Since December 2003, the Company has adopted the approach
of using licenses, joint ventures, mergers and acquisitions to
bring battery and telecom equipment makers in China to markets
overseas. The Company's products now power digital cameras, camera
phones, PDAs and laptop computers in East Asia and beyond. China
Digital is continuing its expansion across China, while also
seeking distribution partners in the United States. For more
information, visit http://www.chinadigitalgroup.com/.
Forward-looking statement: Except for the historical information,
the matters discussed in this news release may contain
forward-looking statements, including, but not limited to, factors
relating to future sales. These forward-looking statements may
involve a number of risks and uncertainties. Actual results may
differ materially based on a number of factors, including, but not
limited to, uncertainties in product demand, risks related to doing
business in China, the impact of competitive products and pricing,
changing economic conditions around the world, release and sales of
new products, and other risk factors detailed in the company's most
recent annual report and other filings with the Securities and
Exchange Commission. For further information, contact: At the
Company: China Digital Communication Group Roy Teng 310-461-1322
E-mail: http://www.chinadigitalgroup.com/ Investor Relations: OTC
Financial Network Peter Clark 781-444-6100, x629
http://www.otcfn.com/chid First Call Analyst: FCMN Contact:
DATASOURCE: China Digital Communication Group CONTACT: Roy Teng of
China Digital Communication Group, +1-310-461-1322, ; or Peter
Clark of OTC Financial Network for China Digital Communication
Group, +1-781-444-6100, ext. 629, Web site:
http://www.chinadigitalgroup.com/ http://www.zhuotong.com/
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