VisionChina Media To Sell Subway Mobile TV Advertising Business For $119 Mln

(RTTNews) - VisionChina Media Inc. (VISN) announced its consolidated variable interest entities VisionChina Media Group Co., Ltd. and Shenzhen HDTV Industrial Investment Co., Ltd. have entered into an equity transfer agreement and a profit compensation agreement to sell all of VisionChina Media's subway mobile TV advertising business to Ledman Optoelectronic Co., Ltd. for an aggregate consideration of RMB780 million or US$119 million.

Prior to the Transaction, the Sellers completed a restructuring to transfer the Target Business to VisionChina New Culture Media Co., Ltd. , an entity wholly owned by the Sellers. Since January 1, 2016, New Culture has been the operating entity of the Target Business. Upon the closing of the Transaction, Ledman will hold 100% equity interest of New Culture.

As per the equity transfer agreement, Ledman will pay RMB390 million in cash and the other RMB390 million in the form of 20,774,680 newly issued shares of Ledman, valued at RMB18.8 per share, which is 90% of Ledman shares' average trading price in the 20 trading days immediately before the public announcement of the approval of the Transaction by Ledman's board of directors. Within 60 days after the closing of the Transaction, Ledman will pay an installment of RMB130 million in cash.

Within 120 days after the closing of the Transaction, Ledman will pay the remaining amount of RMB260 million in cash. The issuance of Ledman's shares shall be subject to the China Securities Regulatory Commission approval. Upon the completion of the Transaction, VisionChina Media, through the Sellers, will indirectly own about 5.6% of Ledman. The Share Consideration will be subject to a 36-month lock-up.

VisionChina Subsidiaries and their related parties also agreed to not engage in any business that competes or may compete with the Target Business for a period of eight years.

The management team members and other key employees of New Culture have each entered into an employment contract for a term of five years or more, a confidentiality agreement and a non-competition agreement pursuant to which such person have agreed to not engage in the Target Business or any business that competes or may compete with the Target Business for a period of three years after the termination of his or her employment.

According to the 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 are less than the profit target for such fiscal year - RMB60 million, RMB80 million and RMB100 million, respectively , VisionChina Subsidiaries will compensate Ledman for the deficiency by returning a certain amount of the Share Consideration to Ledman.

In the event that the Share Consideration is not sufficient to compensate for such deficiency, VisionChina Subsidiaries are 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 Consideration.

Ledman will allocate 50% of the surplus of the accumulated net profits of the Target Business 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.