SHENZHEN, China, Jan. 4 /Xinhua-PRNewswire/ -- Diguang International Development Co., Ltd. (OTC Bulletin Board: DGNG) ("Diguang"), an emerging, China-based leader in the manufacture of CCFL and LED backlights for the LCD display industry, today announced the acquisition of Dongguan Diguang Electronic Science and Technology ("Dongguan S&T").
(Logo: http://www.prnasia.com/sa/200708301921.JPG )
Dongguan S&T is a related company controlled by Song Yi, Chairman and CEO of Diguang International, and his brother Song Hong, Diguang's Director and Chief Operating Officer. Dongguan S&T owns Diguang's principal manufacturing facilities and the land they occupy in the city of Dongguan, and has been receiving rent from Diguang as noted in the Company's disclosure documents regularly filed with the U.S. Securities and Exchange Commission.
The purchase consideration totals US$4.2 million, with a $2 million initial deposit paid on December 30, 2007 and the balance, including accrued interest, 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.
"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," commented Song Yi. "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.
"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."
The financial statements upon which the acquisition was based were compiled in accordance with U.S. generally accepted accounting principles (GAAP) and reviewed by the Company's auditors. The valuation report was prepared by an independent property surveying firm with global operations.
"By owning its own land and factory, Diguang further strengthens its ability to serve key Southern China customers, primarily LCD assembly companies," Mr. Song concluded. "We are pleased to consummate this acquisition using internally generated, positive cash flow to optimum advantage."
About Diguang International Development Co., Ltd.
Diguang, through its subsidiaries, specializes in the research, development, production, sale and distribution of backlights and backlight technologies. A backlight is the typical light source of a liquid crystal display (LCD). The Company is focused on providing LED and CCFL backlights for international producers of televisions, monitors, cellular phones, digital cameras, DVDs and other home appliances. Diguang currently develops an average of approximately 50 new products per month. Diguang is a Nevada corporation with its manufacturing subsidiary located in Shenzhen, PRC, and its sales and marketing subsidiary located in the British Virgin Islands.
Safe Harbor Statements
This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements are based upon the current plans, estimates and projections of Diguang’s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: uncertainties related to the integration of acquired operations, business conditions in China, weather and natural disasters, changing interpretations of generally accepted accounting principles; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which Diguang is engaged; fluctuations in customer demand; management of rapid growth; intensity of competition from other providers of backlights; timing approval and market acceptance of new product introductions; general economic conditions; geopolitical events and regulatory changes, as well as other relevant risks, including but not limited to risks outlined in the Company’s filings on Forms 10K and 10Q and other periodic filings with the U.S. Securities and Exchange Commission. Diguang does not assume any obligation to update the information contained in this press release.
For more information, please contact:
Company Contact:
T.C. Shen, Assistant to the President
Diguang International Development Co., Ltd.
Tel: +1-626-593-5486
Investor Relations Contact:
Sean Collins, Senior Partner
CCG Elite
Tel: +1-310-477-9800 x202
