Diguang International Development Co., Ltd. (DGNG.OB), a Chinese based company that manufacturers CCFL and LED backlights for the LCD display industry, announced that the company has signed an agreement to acquire Dongguan Diguang Electronic Science and Technology.
This purchase consideration totals US $4.2 million, with an initial $2 million being deposited on December 30, 2007. The remaining balance, including accrued interest, is to be payable in four installments of $550,000 by June 2009. Completion of various required registration and approval procedures is expected to take approximately six months.
Song Yi, CEO, commented, “As we expand our manufacturing facilities in accordance with the Company’s 2008 strategic growth plan, it is important that we do so with a strengthened ownership structure. This acquisition allows us to fully comply with government mandates in China that the usage of a property must match its ownership. So direct ownership by Diguang, rather than indirect utilization of these properties, helps us avoid any questions of business purpose.
Yi continued, “Because we will own these properties instead of renting them, this transaction allows us to realize significant cost savings in our operations,” Mr. Song continued. “Diguang will benefit from a prospectively appreciating asset in the long term and the continued appreciation of local currency. The possession of the property and its consequent appreciation as a result of the booming property market in China will provide a valuable pledge for the bank borrowings for our future business expansion.”
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