Qiao Xing Universal Telephone (XING) said that it has entered into an agreement to sell its indoor phone and lower-end mobile phone business subsidiary Qiao Xing Communication Holdings (QXCH) to Dragon Fu Investment (DFIL).
DFIL, an independent third-party holding company, is planning to enter into China’s consumer electronics industry. The agreement is expected to help DFIL to mark its entry point to the Chinese market.
According to the company, the total purchase price consideration is approximately $11m, of which $7.7m has been paid at the closing and the remaining $3,3m shall be paid on or before December 31, 2009. The total purchase price is referenced to an appraisal report issued to the company, as well as negotiation between the parties.
In addition, in accordance with the agreement, DFIL undertakes to repay as a primary obligor, or to cause QXCH’s subsidiary to repay, the outstanding loan of RMB235.9m which was due from QXCH’s subsidiary to the company as of August 31, 2009, in full to XING in three instalments but no later than twelve (12) months from the date of this agreement.
DFIL, an independent third-party holding company, is planning to enter into China’s consumer electronics industry. QXCH, through its Chinese operating subsidiary, has primarily specialised in the indoor phone and lower-end mobile phone businesses. Although it has recorded significant losses for 2008, QXCH still provides DFIL with an attractive entry point to the broad Chinese market.
Mr. Wu, chairman and CEO of Qiao Xing Universal Telephone, said: We will use the proceeds from this sale and the repaid loan to pursue additional resource-focused opportunities. In addition, we may spin-off our higher-end mobile phone business by distributing our shares in Qiao Xing Mobile Communication to XING’s shareholders at the appropriate time, thus completing our transition into a focused resources business in China.