HONG KONG, Dec. 31, 2014 /PRNewswire/ -- SGOCO Group, Ltd.
(Nasdaq: SGOC) ("SGOCO" or the "Company"), a company focused on
product design, distribution and brand development in display
products, today announced the sale of 100% of the equity of SGOCO
(Fujian) Electronic Co.,
Ltd. ("Sgoco Fujian"), a company
registered in China, to Apex
Flourish Group Limited (the "Purchaser").
Regarding the sale of the SGOCO (Fujian) Electronic Co., Ltd., Mr. Xie Shi Bin, Chief Executive Officer
of SGOCO, commented, "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. The demand for flat panel LED and LCD products in
China has dropped in recent years
due to the increased popularity of portable devices, which affects
the sales performance of related products. Sgoco Fujian engaged in
sales and distribution of LED and LCD products in Southern China. The transaction will also help
to accelerate the transformation of SGOCO to a more flexible
company that is able to adjust to the new business environment.
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 Purchaser 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, 2014
calculated on the basis of Chinese Accounting Standards. The
estimated value is approximately US$10,000,000, and the final amount will be
adjusted accordingly. The Purchaser 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 $83,000,000
and the Purchaser assumed responsibility to pay such Payables.
Under the SPA, payments shall be made in several installments upon
and after completion of the Sale. Each installment will be 10% of
the Sale Price and Payables or RMB
58,000,000 (approximately US$9,300,000) or its equivalent. The first
installment will be due fourteen (14) days after the completion of
the transaction, and the last installment (approximately 10% of the
Sale Price) will be settled prior to June
30, 2015. The transfer of the Sale Equity is expected to be
effective on December 31, 2014.
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 the Purchaser 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 Purchaser 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 the Purchaser 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.
The Purchaser, Apex Flourish Group Limited, is an independent
third party with interests in real estate and forestry products. It
previously purchased Honesty Group Holdings Limited, SGOCO's prior
manufacturing business, in November 15,
2011. The agreed upon selling price is consistent with Sgoco
Fujian's net book value. The board of directors of the Company
reviewed the transaction and approved it by a unanimous vote.
Mr. Xie continued, "The transaction will improve our cash flow
in the coming year. The capital will be used for new investments
and exploring new products, including but not limited to acquiring
equities of potential target companies related to electronic and
internet-related businesses and enriching the Company's product
range. We are excited about the transaction and we are looking
forward to the future growth opportunities under our transformation
plan in 2015."
About SGOCO Group, Ltd.
SGOCO Group, Ltd. is focused on product design, brand
development and distribution in the Chinese display market,
including computer monitors, All-In-One ("AIO") and Parts-In-One
("PIO") computers and application specific products. SGOCO sells
its products and services in the China market and abroad. For more information
about SGOCO, please visit our investor relations website
http://www.sgocogroup.com.
For investor and media inquiries, please contact:
SGOCO Group, Ltd.
Kathy Ko
Investor Relations Officer
Tel: +852 2501 0128
Email: kathy.ko@sgoco.com
Safe Harbor and Informational Statement
This announcement contains "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. All statements,
other than statements of historical fact, including, without
limitation, those with respect to the objectives, plans and
strategies of the Company set forth herein and those preceded by or
that include the words "believe," "expect," "anticipate," "future,"
"will," "intend," "plan," "estimate" or similar expressions, are
"forward-looking statements". Forward-looking statements in this
release include, without limitation, the effectiveness of the
Company's multiple-brand, multiple channel strategy and the
transitioning of its product development and sales focus and to a
"light-asset" model, Although the Company's management believes
that such forward-looking statements are reasonable, it cannot
guarantee that such expectations are, or will be, correct. These
forward looking statements involve a number of risks and
uncertainties, which could cause the Company's future results to
differ materially from those anticipated. These forward-looking
statements can change as a result of many possible events or
factors not all of which are known to the Company, which may
include, without limitation, requirements or changes adversely
affecting the LCD and LED market in China; fluctuations in customer demand for LCD
and LED products generally; our success in promoting our brand of
LCD and LED products in China and
elsewhere; our ability to have effective internal control over
financial reporting; our success in designing and distributing
products under brands licensed from others; management of sales
trend and client mix; possibility of securing loans and other
financing without efficient fixed assets as collaterals; changes in
government policy in China; the
fluctuations and competition in sales and sale prices of LCD and
LED products in China;
China's overall economic
conditions and local market economic conditions; our ability to
expand through strategic acquisitions and establishment of new
locations; compliance with government regulations; legislation or
regulatory environments; geopolitical events, and other events
and/or risks outlined in SGOCO's filings with the U.S. Securities
and Exchange Commission, including its annual report on Form 20-F
and other filings. All information provided in this press release
and in the attachments is as of the date of the issuance, and SGOCO
does not undertake any obligation to update any forward-looking
statement, except as required under applicable law.
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SOURCE SGOCO Group, Ltd.