VisionChina Fails to Transfer $60M to New York's Sheriff by Court's Deadline
NEW YORK, Oct. 22, 2012 /PRNewswire/ -- Oak Investment Partners and Gobi Partners have filed a contempt motion in the New York State Supreme Court against VisionChina Media, Inc. (Nasdaq: VISN) and its subsidiary, Vision Best Ltd., for their failure to transfer $60 million into New York State by August 21, 2012.
The motion argues that VisionChina's failure to pay is a "willful" violation of the Court's order to transfer the money by the deadline. To date, VisionChina has transferred only $3.2 million of the total.
"VisionChina's unilateral decision simply to ignore the Transfer Order can be interpreted in no other way than as a clear demonstration that its disobedience of the Transfer Order was intentional, knowing, and willful," according to the motion. "The Court should enter an Order holding VisionChina in civil contempt."
The Court ordered VisionChina to transfer $60 million in August, and an appellate court denied VisionChina's motion to stay enforcement of that order. The funds were supposed to be held in the custody of the New York City Sheriff's office or deposited into an escrow account controlled by the Sheriff. The payment is meant to ensure that funds will be available to Gobi and Oak should a final court ruling uphold their claim to the money.
Oak and Gobi also offered to establish an escrow account in China so VisionChina could transfer the remaining funds – about $56.7 million – without being subject to China's alleged currency restrictions. VisionChina did not agree to Oak and Gobi's proposal.
The dispute stems from VisionChina and its subsidiary not fulfilling their contractual obligation to pay consideration owed for their acquisition of Digital Media Group (DMG).
VisionChina acquired DMG from Gobi and Oak in January 2010, pursuant to a Merger Agreement that required VisionChina to make an initial payment of $100 million in cash and stock and two deferred payments of $30 million each over the next two years. DMG operated China's leading digital media network inside subway systems comprising over 34,000 digital screens in 32 subways, high-speed train lines and bus shelters.
VisionChina failed to make the two deferred payments, totaling $60 million.
Oak and Gobi are pursuing additional damages in connection with VisionChina's breach of its agreements to complete the purchase of DMG. Oak and Gobi believe that the total damages because of VisionChina's conduct exceed $114 million.
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. There is also a related case, VisionChina Media Inc., et al., v. Shareholder Representative Services, LLC, et al., index # 652390/2010.
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, Guangzhou, 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 five 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.
