SGOCO Sells SGOCO (Fujian) Electronic To Apex Flourish

(RTTNews) - Chinese display products maker SGOCO Group Ltd (SGOC) on Wednesday announced the sale of SGOCO (Fujian) Electronic Co Ltd to Apex Flourish Group Ltd.

Commenting on the deal, Xie Shi Bin, CEO of SGOCO, said, "Due to the unexpected negative downturn plus outlook of the flat panel LED and LCD display industry in China, the company considered the need to further reform its business. This transaction is an important step toward achieving the target of reducing the sales proportion of our flat panel LED and LCD products."

"After the sale of Sgoco Fujian, the company will increase the focus on investing and acquiring potential target companies to enrich the company's product range and business opportunities. We continue to look for new opportunities in electronic and internet-related businesses and have commenced a study of a few potential targets."

The company entered into an Agreement for Sale and Purchase ("SPA") with the Apex pursuant to which it will sell all of the equity of Sgoco Fujian ("Sale Equity").

The sales price for all the Sale Equity shall be equivalent to the net asset value of Sgoco Fujian on December 31, calculated on the basis of Chinese Accounting Standards. The estimated value is approximately US$10 million, and the final amount will be adjusted accordingly, the company said.

Apex also agreed to acquire Sgoco Fujian to settle the entire balance of accounts payable and other payables (the "Payables") due to SGOCO and its affiliates, which amounts to approximately $83 million and Apex assumed responsibility to pay such Payables.

Payment of the Sale Price and Payables are secured by a pledge of the Sale Equity and Sgoco Fujian's assets. There shall be imposed upon Apex a 2% per month liquidated damage charge for any late payment computed upon the amount of any outstanding principal and accrued interest whose payment to the Seller is overdue for more than 30 days under this Agreement.

In the event that the Apex does not make the installment payments, SGOCO will have the right to take back ownership of the Sale Equity or force the Purchaser to liquidate Sgoco Fujian's cash, accounts receivable and advances to suppliers to have sufficient funds to make the payments to the Seller.

The SPA also states that SGOCO has a right of first refusal for a period of five years that prohibits Apex from selling, assigning or otherwise transferring any material interests, ownership or rights in or related to Sgoco Fujian including any equity, leases, businesses and equipments to a third party, without first offering to sell or transfer to SGOCO.