PR Newswire, 2/01/10
Chinese network solutions provider UTStarcom (Nasdaq: UTSI) has announced that it has entered into agreements for a strategic relationship with Beijing E-Town International Investment and Development Co., Ltd (BEIID), an investment company established by the Beijing Municipality which includes an investment of USD 48.5 mln by BEIID and two unrelated investment funds. The three investment parties are advised by Yellowstone Capital. As part of the investment, UTStarcom will issue approximately 22 mln shares of common stock at a price of USD 2.20 per share, with BEIID investing USD 25 mln, Ram Max Group Limited investing USD 12.5 mln and Shah Capital Management investing USD 11 mln.
Upon closing of the transaction, Du Baichuan, a former deputy chief engineer of China's State Administration of Radio, Film and Television (SARFT), will join UTStarcom's board of directors. Li Xiaoping, executive deputy general manager of BEIID, and William Wong, a managing director at Yellowstone Capital, will also join the board upon closing of the transaction. Li and Wong will replace Allen Lenzmeier and Jeff Clarke, who will resign from UTStarcom's board of directors at that time. The total number of directors on the board will be increased from six to seven in connection with the transaction.
In connection with the transaction and in furtherance of UTStarcom's strategic goals in China, Jack Lu has been appointed the new CEO and president effective the later date of three months after the closing of the investment or June 30, 2010. From the closing of the transaction until he assumes the CEO position, Lu will serve as COO. Peter Blackmore will retire as CEO and president of UTStarcom upon Lu's assumption of the CEO position.
Consistent with its previously announced plans, UTStarcom will move its headquarters to Beijing, China as part of an agreement with Beijing Development Area, which is also related to Beijing Municipality. That agreement will be effective upon closing of the investment. As part of the agreement, UTStarcom will be able to apply to Beijing Development Area for tax incentives and other financial and non-financial assistance. UTStarcom plans to retain all its operations in Hangzhou and Shenzhen.