Zoom Tech Announces Sale of China-Based Operations for ~$32M
Zoom Technologies, Inc. (Nasdaq: ZOOM) a leading designer and manufacturer of mobile phones and consumer electronics, announced the execution of a definitive agreement pursuant to which it will sell its China-based manufacturing, sales and marketing, and R&D subsidiaries, and that the proceeds of the sale will be used for the purchase of additional U.S.-based businesses.
On December 31, 2012, Zoom Technologies, Inc. ("Zoom" or the "Company") entered into a Share Purchase Agreement with the Beijing Zhumu Culture Communication Company, Ltd. (the "Purchaser"), a PRC company that provides services to the telecommunication industry, for the sale to the Purchaser of the Company's China based operations including: 100% ownership of Beijing Nollec Wireless Company ("Nollec") – the R&D subsidiary, 80% ownership of Tianjin Tongguang Group Digital Communication Company, Ltd. ("TCBD") – the main manufacturing entity, 100% ownership of Profit Harvest Corporation, Ltd. ("Profit Harvest") – the sales & marketing company, and 100% ownership of Celestial Digital Entertainment, Ltd. ("CDE") – the mobile game maker. As consideration for the sale, the Purchaser shall pay the Company an aggregate of Rmb 200 million, equivalent to approximately US$32 million. The purchase price is, subject to adjustment pending an appraisal by an independent third party appraiser. As of the date of the Share Purchase Agreement, the Purchaser has deposited the full amount of RMB 200 million into an escrow account, to be released to the Company upon the final closing of the Sale, which will be held 30 days after the Company receives all the requisites corporate and regulatory approvals with respect to the Sale.
The Company's ownership interest in SpreadZoom Technologies Co., Ltd., which owns and operates mobile phone manufacturing facilities in Tianjin and which is a joint-venture between the Company and Spreadtrum Technologies, Inc., is not part of the sale.
The final closing of the sale of the above-mentioned subsidiaries of the Company is anticipated to take place within the first quarter of 2013 with the exception of Profit Harvest which closing occurred as of December 31, 2012. In addition, the Company will, through Portables Unlimited, LLC, its U.S. based subsidiary, continue to operate the exclusive wholesale distributor business for T-Mobile products and services in the United States.
The Company intends to use the cash proceeds from the sale of the assets to acquire similar businesses in the U.S. to further expand its activities there, including but not limited to the acquisition of additional licensed retail stores that service T-Mobile USA.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.