Boston, MA 06/16/2014 (wallstreetpr) – Conditional access system provider to the Chinese digital television market, China Digital TV Holding Co., Ltd. (NYSE:STV) disclosed that it had struck a framework deal with asset management company for an asset restructuring. As a result, the stock surged Friday’s regular closing by over 10% indicating the benefits to be achieved for the company.
Asset Restructuring Deal
The company said that it had reached a deal with Cinda Investment Co. Ltd., which is a subsidiary of China Cinda Asset Management Co., Ltd., allowing the company to insert its businesses of conditional access, video on demand, and network broadcasting platform into Shanghai Tongda Venture Capital Co., Ltd., a listed and Cinda Investment controlled company.
In return, China Digital TV Holding., Ltd.(ADR) (NYSE:STV) will buy a controlling interest in Tongda Venture and get cash of RMB1.15 billion. The conditional access provider expects to strengthen Tongda venture financially after the restructuring process is completed.
Restructuring Terms
As per the restructuring terms struck between the two companies,China Digital TV Holding., Ltd.(ADR) (NYSE:STV) will award warrants of $25 – $30 million to Cinda Investment or its affiliates assigned by it, but a maximum of two affiliates. It meant the investment company buying China Digital TV’s fresh shares at a price that is equal to the average trading price of its shares listed on the NYSE during the 20 trading days before the framework deal was given its approval by the board of China Digital TV.
The exercise of warrants by Cinda investment depends on the restructuring completion as per the framework agreement. Accordingly, China Digital TV Holding., Ltd.(ADR) (NYSE:STV) would offer RMB110 million performance bond to Cinda Investment. The guarantee period will start from the framework agreement date and closes before December next year, by which time the restructuring is expected to be completed.
The Restructuring completion exercise is subject to the regulator’s scrutiny amid following the more and more stringent principles set for similar agreements. The companies indicated that the restructuring will stand terminated in the event of a failure to complete it before December 2015.
