Diguang International Development Company, a manufacturer of CCFL and LED backlights for the LCD display industry, announced the acquisition of Dongguan Diguang Electronic Science and Technology in China.
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 US$2 million initial deposit paid on December 30, 2007 and the balance, including accrued interest, payable in four installments of US$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.