Oak Investment Partners and Gobi Partners Begin Taking Steps to Attach $30 Million of VisionChina's Assets Pursuant To A Court Order; VisionChina's Notice of Appeal Will Have No Impact on Their Actions
Oak and Gobi To File Summary Judgment Motion This Week on Case After Judge Says They Are More Likely Than Not to Succeed on the Merits of their Claims; Oak and Gobi Expect Total Damages to Exceed $90 Million
NEW YORK, Nov. 14, 2011 /PRNewswire-Asia/ -- Shareholders of Digital Media Group Company Limited. (DMG) today said that they have begun taking steps to attach $30 million of the assets of VisionChina Media Inc. (Nasdaq: VISN), pursuant to an order granted by the New York State Supreme Court.
The DMG shareholders, US-based Oak Investment Partners and China-based Gobi Partners (Oak and Gobi) said VisionChina's Notice of Appeal, which was filed on Friday, November 11, will have no impact on their actions to attach VisionChina's assets.
In his ruling granting Oak and Gobi's motion to attach, Judge Charles E. Ramos stated that Oak and Gobi, "have demonstrated that it is more likely than not [they] will succeed on the merit of [their] claims ... Drawing all legitimate inferences in their favor, the Sellers make a showing that the Merger Agreement is a binding and valid contract ... which VisionChina breached by failing to pay the first and subsequent payments due."
Commenting on VisionChina's Notice of Appeal, Mindy Morton, an attorney for Oak and Gobi and a partner of the law firm of Bergeson LLP said, "We are confident that the judge's order will be upheld on appeal. We intend to take action immediately to attach $30 million of VisionChina's assets plan, pursuant to the court's order, and intend to file a summary judgment motion this week asking the Court to grant judgment on the entire $60 million due under the Merger Agreement, plus other damages."
Oak and Gobi said they expect the total damages stemming from their lawsuit against VisionChina to exceed $90 million. As of June 30, 2011, VisionChina reported having $123.5 million in cash and cash equivalents on hand.
Oak and Gobi sued VisionChina for, among other things, willfully reneging on the first of two $30 million payments in connection with VisionChina's $160 million acquisition of Digital Media Group Company Limited. (DMG) in 2009. VisionChina paid the initial amount due, but failed to make the second payment of $30 million in November 2010. The final payment, which is also $30 million, is due on November 16, 2011.
VisionChina sued Oak and Gobi for fraud, and sought to defend against Oak and Gobi's affirmative claims for payment based on the same purported fraud. The judge dismissed all fraud charges against Oak and Gobi, writing, "... it is plain that Visonchina is not able to maintain a viable cause of action for fraud (against Oak and Gobi)."
"We have maintained from the outset of this case that VisionChina has been trying to renege on payment for a strategic acquisition that it vigorously pursued and fully vetted, and that is a crucial part of their current business," said Daniel Bergeson, of Bergeson LLP. "We look forward to the Court compelling VisionChina to live up to its contractual obligations to Oak and Gobi."
The case, Shareholder Representative Services, LLC, et al. v. VisionChina Media Inc., et al, was filed in the Supreme Court of the State of New York, New York County, index # 650526/2011.
About Oak Investment Partners
Oak Investment Partners is a multi-stage venture capital firm. The primary investment focus is on high growth opportunities in Broadband Internet and Wireless Communications, Information Technology and Software Outsourced Services, Consumer Internet/New Media, Financial Services Technology, Healthcare Information and Services, Clean Energy, and Retail. Over a 33-year history, Oak has achieved a strong track record as a stage-independent investor funding more than 495 companies at key points in their lifecycle. Oak has been involved in the formation of companies, funded spinouts of operating divisions and technology assets, and provided growth equity to mid- and late-stage private businesses and to public companies through PIPE investments
About Gobi Partners
Founded in 2002, Gobi Partners is a venture capital firm with its headquarters and incubation centre in Shanghai and additional offices in Beijing, Hong Kong, and Tianjin, as well as an overseas office in Singapore. A leading investor in early stage digital media and technology companies in Greater China, Gobi manages four funds with over $300 million under management. Since its establishment, Gobi has funded dozens of early to traction stage companies and continues to invest actively in the region.
