PR Newswire Asia, 5/17/11
Mobile phone solutions provider and mobile and online game developer China TechFaith Wireless Communication Technology (Nasdaq: CNTF) today announced it will establish a joint venture company with Beijing E-Town International Investment and Development Co., Ltd. (BEIID), an investment company established by the Beijing Municipality, for a period of 30 years.
This new joint venture arrangement replaces the previously announced contract between TechFaith and BEIID, signed in September 2010, under which BEIID was given an option to turn convertible bonds into TechFaith ordinary shares over the next 5 years at the price of USD 5.00 per ADS.
For this joint venture, TechFaith will invest RMB 300 mln and BEIID will invest RMB 200 mln for the development of a smartphone production line with a production capacity of 10 mln units in Beijing. TechFaith will hold a 60% stake in the joint venture and BEIID will hold the remaining 40%.
Li Xiaoping, Executive Deputy General Manager of BEIID, commented, "We decided to replace the convertible bonds arrangement with a joint venture because we are looking more at the long term growth of the whole industry rather than short term gains, and a joint venture allows us to work more closely together for the long term. We believe with the increasing coverage of 3G networks globally, the demand for smartphones will also increase."
Editor's Note: For more background on this topic, please see "TechFaith to Build USD 70 Mln Smartphone Factory," MD 9/03/10 issue.