SHANGHAI, May 8, 2014 /PRNewswire/ -- Shanghai Pudong Science and Technology Investment Co., Ltd. ("PDSTI") responded today to press releases issued by RDA Microelectronics, Inc. ("RDA") on May 2, 2014 and May 5, 2014, with respect to the pending merger transaction between RDA and Tsinghua Unigroup Ltd. ("Tsinghua Unigroup").
The press release issued by RDA on May 2, 2014 with respect to the pending transaction with Tsinghua Unigroup refers to PDSTI. In a letter to the board of directors of RDA, PDSTI corrected factual errors and misleading information about the position of PDSTI, and confirmed that:
--PDSTI's offer to acquire RDA is in compliance with the Circular on Several Issues about Improving the Administration of Overseas Investment Projects [NDRC Foreign Investment 2009 NO. 1479] and the Measures for the Administration of Examination and Approval of Overseas Investment Projects [NDRC 2014 No. 9];
--PDSTI has obtained an extension of its NDRC pre-clearance approval for an acquisition of RDA through November 2014; and
--PDSTI has sufficient funding to acquire a company of comparable size to RDA.
PDSTI also noted that nearly six months have passed since RDA and Tsinghua Unigroup entered into their merger agreement, and expressed concern over the business and financial impact on RDA due to the uncertainties of completion of the pending transaction with Tsinghua Unigroup.
PDSTI also requested that RDA publicly disclose its financial performance for the first quarter of 2014.
PDSTI urged the board of directors of RDA to re-evaluate the pending transaction with Tsinghua Unigroup and consider alternatives at the earliest opportunity. PDSTI believes that three-way discussions among it, RDA and Tsinghua Unigroup as early as possible could be the only workable solution to protect the best interest of RDA and its shareholders.
The letter to the board of directors of RDA is attached.
About PDSTI
PDSTI, a wholly state-owned limited liability company directly under Pudong New Area government of Shanghai, combines proprietary investments with investment management services. The business of PDSTI currently covers a broad range of areas, including venture capital and private equity investments, mergers and acquisitions, management of fund of funds and private equity funds, and debt investments. PDSTI has deep industry knowledge of integrated circuit design and has invested in several well-known IC design companies. For additional information, please see the website at http://www.pdsti.com.
May 7, 2014
The Board of Directors of
RDA Microelectronics, Inc. ("RDA")
6/F, Building 4, 690 Bibo Road
Pudong District, Shanghai 201203
Dear Members of the Board of Directors,
The press release issued by RDA on May 2, 2014 with respect to the pending transaction with Tsinghua Unigroup Ltd. refers to Shanghai Pudong Science and Technology Investment Co., Ltd. ("we", "us" or "PDSTI"). We note that such press release contains factual errors as to PDSTI and presents information in a way that is misleading.
Pursuant to the relevant PRC laws, a PRC buyer in a transaction of this type is required to obtain pre-clearance approval from the National Development and Reform Commission (the "NDRC") before it enters into a definitive agreement. However, based on the information in your public filings, Tsinghua Unigroup Ltd. did not obtain NDRC pre-clearance prior to signing, and to date still has not obtained such pre-clearance. In contrast, we obtained the NDRC pre-clearance approval prior to your decision to enter into a merger agreement with Tsinghua Unigroup Ltd. in accordance with the Circular on Several Issues about Improving the Administration of Overseas Investment Projects [NDRC Foreign Investment 2009 NO. 1479], and recently, consistent with the Measures for the Administration of Examination and Approval of Overseas Investment Projects [NDRC 2014 No. 9], obtained an extension of that approval through November 2014. This means it is very unlikely for RDA to complete the pending transaction with Tsinghua Unigroup Ltd. while our NDRC pre-clearance approval remains in place.
Contrary to what the May 2 press release suggests, in connection with our offer last fall, we secured financing guarantees from one of the leading Chinese banks, who had already formed an offshore syndicate to provide financing for the acquisition. We informed you, before you entered into the merger agreement with Tsinghua Unigroup Ltd., that we had received a sufficient funding commitment from such Chinese bank and that accordingly, we were highly confident we could complete the acquisition expeditiously. We reiterate that we have sufficient funding to acquire a company of comparable size to RDA.
Next week marks six full months since you entered into a merger agreement with Tsinghua Unigroup Ltd. with no visible sign that Tsinghua Unigroup Ltd. will receive NDRC pre-clearance or that it has obtained necessary financing to complete the intended transaction. Although RDA has made multiple announcements that it was working with Tsinghua Unigroup Ltd. to close the transaction as soon as practicable, we have failed to see any substantive progress in the pending transaction. We have noticed that some media reports allege that the pending transaction with Tsinghua Unigroup Ltd. may not comply with the relevant NDRC requirements. As an interested party to the transaction and a minority shareholder of RDA, we request that the board of directors of RDA publicly clarify whether the transaction with Tsinghua Unigroup Ltd. complies with NDRC legal requirements, and if it does not, explain the resulting impact on the transaction as we are very concerned about the impact of this situation on RDA and its business. The inability to complete and open-ended uncertainty give employees reason to pursue other opportunities, and jeopardize customer relationships, all of which seems to have led to the deterioration in the company's business and financial performance, which in turn negatively impacts the value that can be realized for the company's shareholders.
We also note that the press release on May 5, 2014 states that RDA will not announce its financial results for the quarter ended March 31, 2014 by press release or hold a conference call to discuss such quarterly result. It is well established that U.S. public companies report their financial results quarterly - why is RDA unwilling to do so? Current information on financial and operational results is a fundamental right of shareholders in public companies. Regardless of whether the Tsinghua Unigroup transaction is pending, shareholders are entitled to buy and sell in the open market, and current information is essential for those transactions to be fairly priced, and for them to occur at all. We, therefore, ask RDA to publicly disclose its financial performance for the first quarter of 2014.
We urge you to re-evaluate the proposed transaction with Tsinghua Unigroup Ltd. and consider alternatives at the earliest opportunity. We believe that three-way discussions among you, Tsinghua Unigroup Ltd. and us as early as possible could be the only workable solution to protect the best interest of RDA and its shareholders. To achieve this purpose, we are willing to provide assistance to you and Tsinghua Unigroup Ltd. to resolve the current quagmire and we propose that each of RDA and Tsinghua Unigroup Ltd. consent to three-way discussions, so there will be no claim of any liability or breach under the existing merger agreement as a result of engaging in discussions and negotiations with us.
