Ruifeng Optoelectronics, which suspended trading on March 17 and planned to issue shares to purchase assets, announced today that the company plans to purchase 85% of the equity of Lingtao Optoelectronics through the issuance of shares and payment of cash, and to raise supporting funds of no more than 200 million yuan.
The plan shows that the estimated value of 85% of Lingtao Optoelectronics' equity is 200 million yuan, of which 94 million yuan will be paid in cash, and the remaining 106 million yuan will be paid in the form of issuance of shares. The company will issue 8.7111 million shares and 458,500 shares to Wang Weiquan and Peng Xiaoling respectively at a price of 11.56 yuan/share. After the completion of this transaction, Ruifeng Optoelectronics will directly hold 100% equity of Lingtao Optoelectronics.
At the same time, the company plans to issue shares to TCL, Wen's Investment, Employee Stock Ownership Plan, Chang Bao and Du Jianguo at a price of 11.56 yuan per share to raise supporting funds of no more than 200 million yuan. The number of shares issued is 17.301 million shares, accounting for 7.04% of the total share capital after the issuance. Among them, the first four subscribed for no more than 40 million yuan, and Du Jianguo subscribed for no less than 40 million yuan.
Wang Weiquan and Peng Xiaoling promised that the performance target of Lingtao Optoelectronics in 2015 will be no less than 27 million yuan, the performance target in 2016 will be no less than 30 million yuan, and the total for the three years from 2015 to 2017 will be no less than 90 million yuan. If the net profit in 2015 and 2016 is lower than expected respectively, and the net profit does not reach the promised amount during the profit compensation period, Wang Weiquan and Peng Xiaoling will compensate Ruifeng Optoelectronics in accordance with the signed "Profit Forecast Compensation Framework Agreement".
It is also worth mentioning the company’s employee stock ownership plan. A total of 52 people participated in the employee stock ownership plan, including some directors, supervisors, senior managers and employees of the company and its subsidiaries. The employee stock ownership plan is divided into 40 million units, each with an amount of 1 yuan, and the total amount does not exceed RMB 40 million. The company stated that if the employee stock ownership plan fails to be established or the shares subscribed by its employees are less than 40 million yuan, the part of the shares that are not subscribed to the employee stock ownership plan this time will be fully subscribed by Du Jianguo.
Ruifeng Optoelectronics is mainly engaged in the research and development of LED packaging technology and the manufacturing and sales of LED packaging products. It is the largest LED packaging company in the field of medium and large-sized backlight sources in China. It has become a qualified supplier of LCD TV backlight LEDs in batches for TV manufacturers such as Konka, Skyworth, and Changhong. Lingtao Optoelectronics’ main business is to provide small and medium-sized backlight LED packaging solutions. Ruifeng Optoelectronics said that through the acquisition of Lingtao Optoelectronics, the company will expand its product range in the field of LED backlight, thereby being able to provide more comprehensive solutions for downstream LED application terminal manufacturers and their manufacturing bases.
For this acquisition of Lingtao Optoelectronics, Ruifeng Optoelectronics also faces some industry risks. As LED packaging and application manufacturers around the world have established production bases in my country, production capacity has been continuously released, intensifying industry competition, which may lead to a decline in product prices and increase the difficulty of increasing market share.
As the application fields of LED products continue to expand, the market's requirements for LED product quality, performance, stability, luminous efficiency and other indicators are increasingly increasing, and the risks of technological updates cannot be underestimated. In addition, chips are the most critical raw material for the company's production of LED light source devices, and their costs account for more than 50% of production costs. Price changes also have a direct impact on operating performance. In recent years, mainstream chip suppliers at home and abroad have invested in expanding production, and chip prices have dropped significantly. However, there are still risks of periodic fluctuations in the supply of raw materials.
ANNA