Led International Holdings Regulatory News (LED)

LED International Holdings Limited

(the "Company")

Acquisition of Shenzhen Lamp Energy Management InvestmentCompany Limited

Disposal of Strongbase New Opto-Electronics Technology Company Limited

Issue of equity

Related party transaction

and

Holdings

The board of directors of the Company (the "Board") is pleased to announce that on 21 March 2013 the Group entered into sale and purchase agreements with Mr. Jerry So ("Mr. So") relating to the acquisition by the Company's group (the "Group") of the entire share capital of Shenzhen Lamp Energy Management Investment Company Limited ("Shenzhen Lamp") and disposal by the Group of the remaining effective equity interest (60 per cent.) in Strongbase New Opto-Electronics Technology Company Limited ("Strongbase New").

Highlights

·; Disposal of Strongbase New for a consideration of RMB500,000 (approximately £53,000). The proceeds from this disposal are to be used for additional working capital.

·; Acquisition of Shenzhen Lamp, an energy management service company ("EMCO") registered with the National Development and Reform Commission ("NDRC") of the People's Republic of China (the "PRC") for RMB1,500,000 to be satisfied by the issue of 75,494,024 new ordinary shares of HK$0.10 each in the Company at 0.24p per share (the "Consideration Shares") to Mr. So.

·; The Group intends to pursue its energy management contract ("EMC") business model under the brand name of 'Green Pearl' within the PRC.

Stephen Weatherseed, Chairman, commented: "After strengthening our balance sheet, we are further pleased to be able to immediately pursue our EMC business model within the PRC. We will now promote our 'Green Pearl' brand name in the PRC energy conservation market."

For further information:

Background to the sale of Strongbase New

Over the last few years the Company and its subsidiaries (the "Group") has been transforming its operating business from a low value volume LED manufacturer, with capabilities of manufacturing high value LED display screens, to the provision of EMC services within the PRC in order to take advantage of PRC's increasingly more supportive approach towards energy conservation. According to the 12th Five-Year Plan, the PRC government plans to lower its energy consumption by 16 per cent. and cut its carbon dioxide emission by 17 per cent.by 2015. Against the background of the Chinese government's introduction of a series of policies and regulations designed to promote, encourage and regulate energy conservation within the PRC, the Group aims to become one of the leading energy management service providers in the PRC.

Up until this point the Group's EMC business hadbeen carried out through Strongbase New, a specialist in LED and LED related products, accessories and appliances. As announced previously the previous management of the Company entered into an agreement to acquire 100 per cent. equity interest in Strongbase New on 29 July 2008 which was finally completed on 14 November 2011. However, since completion of the acquisition, the Group had undertaken several measures to integrate Strongbase New's pre-acquisition operation and new business model into the Group, including replacing its board members and expanding its business scope to include LED lighting solutions, reactance filtering equipment etc. Notwithstanding these efforts however, the Board subsequently determined that it had not managed to achieve effective business integration with Strongbase New. This then led to the independent auditor's disclaimer of audit opinion on the Company's 2012 annual report in relation to the acquisition, assets and liabilities and certain sales transactions of Strongbase New. In consequences, the Board resolved to replace Strongbase New as the vehicle through which it would carry out its EMC business through an orderly disposal.

In pursuance of this strategy, the Board is pleased to announce that the Company has disposed of its effective equity interest in Strongbase New to Mr. So for a consideration of RMB500,000 (approximately HK$628,000 or approximately £53,000). Included within the sale was Yanford Limited, the immediate holding company of Strongbase New and a wholly owned subsidiary of Green Pearl Energy Conservation Holdings Limited ("Green Pearl Energy") in which the Company owned 60% and in which Mr. So already held the remaining 40 per cent. equity interest.

The proceeds of the sale of Strongbase New will be used to facilitate the Group's working capital and its EMC development plans.

Background to the acquisition of Shenzhen Lamp

The Group intends to primarily focus on the growing domestic Chinese EMC market opportunities, which it will do under the brand name of 'Green Pearl', and in so doing continues to work with Mr. So in order to develop this aspect of the Group¡¯s business further and identify how the Group can leverage Mr. So's knowledge, experience and contacts. In so doing, the Board is pleased to announce that the Group has acquired the entire share capital of Shenzhen Lamp, a company with a valid and effective EMCO registration with the NDRC, from Mr. So as a replacement for Strongbase New. The Board envisages that this will enable the Group to take advantage of certain favorable policies and terms for the EMC industry within the PRC more rapidly without the need to apply for its own EMCO registration for Strongbase New, a process which can be quite lengthy. On 14 March 2013, Shenzhen Lamp applied to change its company name to Shenzhen Green Pearl Energy Management Company Limited ("GPEMCO"). On 21 March 2013, the Market Supervision Administration of Shenzhen Municipality approved the change of company name. The Group's EMCO will run through GPEMCO.

The transaction has been structured so that Green Pearl Energy has acquired the entire issued share capital of Shenzhen Lamp via either the direct acquisition of its immediate parent company, Shenzhen Green Pearl Energy Management Technology Development Company Limited ("Shenzhen GP Energy"), or itsultimate parent company, Richmen Corporation Limited (Richmen") (at the Group's election depending on the completion of the registration of various share transfers in Shenzhen GP Energy or Richmen). Included within the group is Richmen's immediate wholly owned subsidiary, Shenzhen GP Energy, which itself owns 100 per cent. of Shenzhen Lamp. The acquisition agreement was signed on 21 March 2013 and the consideration for the acquisition was the issue and allotment of the Consideration Sharesto Mr. So.

It is also a term of the acquisition that Strongbase New's business and assets, including patents and intellectual property rights, inventories, EMC contracts, will be transferred into Shenzhen Lamp.

Related party transactions

As Mr. So is a substantial shareholder in the Company (currently holding 14.39 per cent. if the current issued share capital), the acquisition of Shenzhen Lamp and disposal of Strongbase New (together the "Transactions") constitute related party transactions pursuant to Rule 13 of the AIM Rules for Companies. The Company's directors, having consulted with the Company's nominated adviser, Allenby Capital Limited, consider that the terms of the Transactions are fair and reasonable insofar as the Company's shareholders are concerned.

Holdings

The Consideration Shares are equivalent to approximately 15.0 per cent. of the Company's share capital as enlarged by the issue of the Consideration Shares. When issued and aggregated with his existing shareholding, the issue of the Consideration Shares will result in Mr. So holding 137,055,225 ordinary shares or 27.2 per cent. of the Company's issued share capital as enlarged by the issue of the Consideration Shares.

An application has been made for the Consideration Shares to be admitted to trading on AIM and it anticipated that they will be admitted to trading on or about 27 March 2013. Following the issue of the Consideration Shares the Company's issued share capital will be 503,293,492 ordinary shares of HK$0.10 each. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company. 

Notes to Editors:

LED International Holdings Limited and its subsidiaries specialize in the provision of EMC contracts under which the Group installs energy saving products in its customers' premises, including lighting and reactance filtering equipment supplied by the Group, and the subsequent savings made by the customers in their electricity charges are then shared between the Group and the customers thereby enabling the Group to generate recurring revenue rather than one-off sales revenue. Historically, the Group¡¯s business has been the development, manufacture and sale of low-powered light-emitting diode ("LED") display screens and modules.

Under EMC contracts, the Group provides energy efficiency solutions, including LED lighting, reactance filtering energy saving and other energy efficiency solutions. Specifically, the Group overhauls its customers¡¯ existing lighting and power consumption systems (which are based on traditional lighting technology and power generation equipment) with proprietary LED lighting products, reactance filtering equipment and other solutions provided by the Group. These energy efficiency products are installed in customers' premises. The Group bears all the upfront costs associated with the supply and installation of the energy efficiency solutions and these costs are then recouped by sharing in the monthly energy savings generated by the customers' use of the energy efficiency solutions over the period of the contracts. The Group receives revenue from customers on several different payment terms including on a pre-payment, monthly or quarterly basis.

For more information, please visit: http://www.led-intl.com