NYSE-listed China Digital TV has agreed to transfer its conditional access and solutions unit to China’s Shanghai Tongda Venture Capital as part of the group’s complex asset restructuring.
The move will see Tongda take 100% of Beijing Super TV,…
NYSE-listed China Digital TV has agreed to transfer its conditional access and solutions unit to China’s Shanghai Tongda Venture Capital as part of the group’s complex asset restructuring.
The move will see Tongda take 100% of Beijing Super TV, which is a subsidiary of China Digital TV’s Golden Benefit Technology unit, for an initial consideration of Yn3.2bn (US$523m).
Tongda, which is controlled by asset management firm Cinda Investment, will issue Golden Benefit Yn800m (US$131m) worth of shares, giving it a stake of around 17.24%, and will pay the remaining consideration in cash. It aims to fund the deal through a private placement.
The shares will be tied to a 36-month lock-up but could be given back to Tongda if Super TV fails to hit certain profit targets up to fiscal year 2016.
When China Digital TV first announced restructuring plans in June, the group said it would transfer its conditional access and digital broadcasting solutions business to Tongda for Yn1.15bn (US$188m) in cash and a controlling stake in it.
Under the new plan, the conditional access smart card supplier has issued Cinda a warrant, exercisable within three months after completing the restructuring, to buy its shares at US$3.33 each for an amount between US$25m and US$30m.
Cinda is also being given the option to acquire up to 8% of its Beijing Cyber Cloud and Beijing Joysee Technology subsidiaries, based on a valuation of the companies at Yn350m (US$57m) and Yn240m (US$39m), respectively.
However, the group repeated its warning of the uncertainties surrounding its ability to complete the restructuring, which needs shareholder approval and regulatory clearances from groups including the China Securities Regulatory Commission, the PRC Ministry of Finance and the PRC Ministry of Commerce.
“The restructuring is expected to be subject to close scrutiny by the regulators amid increasingly stringent standards for similar transactions,” it said.
China Digital TV also reaffirmed plans to scrap the restructuring if it is not completed by the end of next year.
