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TPV TECHNOLOGY LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 903)

CONNECTED TRANSACTION IN RELATION TO THE ENTERING INTO THE SUPPLEMENTAL JOINT VENTURE AGREEMENT AND

THE SUPPLEMENTAL INVESTMENT AGREEMENT

THE SUPPLEMENTAL JOINT VENTURE AGREEMENT AND THE SUPPLEMENTAL INVESTMENT AGREEMENT
Reference is made to the announcement of the Company dated 27 April 2012 in relation to the establishment of the Joint Venture. The Board is pleased to announce that, on 20
January 2014, Top Victory, a wholly-owned subsidiary of the Company, entered into the
Supplemental Joint Venture Agreement and the Supplemental Investment Agreement in relation to the Joint Venture.
LISTING RULES IMPLICATIONS
CEC is the controlling shareholder of the Company. CEC Panda and Panda LCD are connected persons of the Company under the Listing Rules by virtue of them being a subsidiary of CEC. The entering into of the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement therefore constitute connected transactions for the Company under Chapter 14A of the Listing Rules. As each of the applicable percentage ratios is less than 5%, the entering into of the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement are subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement of Chapter 14A of the Listing Rules.
INTRODUCTION
Reference is made to the announcement of the Company dated 27 April 2012 in relation to the establishment of the Joint Venture. The Board is pleased to announce that, on 20 January
2014, Top Victory, a wholly-owned subsidiary of the Company, and (i) five parties entered into the Supplemental Joint Venture Agreement; and (ii) three parties entered into the Supplemental Investment Agreement, in relation to the Joint Venture.
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THE SUPPLEMENTAL JOINT VENTURE AGREEMENT Date
20 January 2014
Parties
(1) Top Victory; (2) CEC;
(3) CEC Panda; (4) Xingong;
(5) Xingang; and
(6) Sharp
CEC is a company established in the PRC with limited liability. It is the controlling shareholder of the Company. It is a state-owned conglomerate directly under the administration of the central government of the PRC, and the largest state-owned information technology company in China. It was established in 1989 and originated from the former Ministry of Electronics Industry as a result of government restructuring. The principal activities of CEC comprise the manufacture and sale of electronics products.
CEC Panda is a company established in the PRC with limited liability and a non-wholly owned subsidiary of CEC. It is principally engaged in three major sectors, including new displays, electronic devices and modern services, which cover industries such as display devices, high- tech electronic equipment, industrial automation system equipment, transport electronic system equipment, digital home electrical appliances, components, trading and services.
Xingong is a company established in the PRC with limited liability. Xingong and its ultimate beneficial owners are third parties independent of the Company and its connected persons. It is principally engaged in the centralized management of the 'staff, finance and resources' of the four industries 'electrical and mechanical, pharmaceutical, chemical engineering and textile'.
Xingang is a company established in the PRC with limited liability. Xingang and its ultimate beneficial owners are third parties independent of the Company and its connected persons. It is principally engaged in operation of Nanjing Economic and Technological Development Zone.
Sharp is a company incorporated in Japan with limited liability. Sharp and its ultimate beneficial owners are third parties independent of the Company and its connected persons. It is principally engaged in consumer/information products and electronic components. It is listed in Tokyo Stock Exchange.
Principal activities of the Joint Venture
The principal business activities of the Joint Venture will be including, among other things, (a) to research, develop, manufacture and sell the Products; (b) to provide services in relation to the Products; and (c) to import and export of a variety of products and technologies.
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Shareholding of and capital contribution to the Joint Venture
The Joint Venture was a company established in the PRC and, upon Completion, it will be owned as to as follows:
Parties
Shareholding percentage
Top Victory 0.800% CEC 38.082% CEC Panda 17.143% Xingong 34.257% Xingang 2.000% Sharp 7.718%
Upon Completion, the board of the directors of the Joint Venture will consist of nine members, of which five shall be appointed jointly by CEC and CEC Panda; two shall be appointed by Xingong; one shall be appointed by Xingang and one shall be appointed by Sharp.
Upon Completion, the total investment of the Joint Venture will become RMB29,150 million (equivalent to approximately US$4,664 million) and the registered capital of the Joint Venture will continue to be remain unchanged of RMB17,500 million (equivalent to approximately US$2,800 million). The amount of registered capital deemed to be contributed by the parties to the Supplemental Joint Venture Agreement will be on a pro rata basis with reference to their respective shareholding percentage in the Joint Venture at Completion. Accordingly, save for the proportional contribution of registered capital by Top Victory of RMB140,000,000 (US$22,400,000), which remains the same as stipulated in the Joint Venture Agreement, no additional funding will be required to be contributed by Top Victory as a result of entering into the Supplemental Joint Venture Agreement.
The deemed capital contribution made by each party was determined after arm's length negotiation with reference to the amount of registered capital of the Joint Venture and the shareholding percentage to be held by the respective parties to the Supplemental Joint Venture Agreement.
Term of the Joint Venture
Unless terminated earlier, the term of the Joint Venture shall be 30 years from the date of obtaining the business licence of the Joint Venture pursuant to the Supplemental Joint Venture Agreement. The term of the Joint Venture may be extended if, among other things, mutually agreed by the parties to the Supplemental Joint Venture Agreement no less than six months prior to the expiration of the term of the Joint Venture.
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Conditions precedent
The Supplemental Joint Venture Agreement will become effective upon:
(a) Sharp providing a representation that the provision of capital and technology to CEC has been approved by the authorities in Japan, prior to obtaining the required approvals from the relevant National and Development Reform Commission of the PRC in relation to the technology of the Products;
(b) completion of relevant procedures of each of CEC, CEC Panda, Xingong, Xingang, Top
Victory and Sharp to enter into the Supplemental Joint Venture Agreement; and
(c) obtaining of the final approval on the Supplemental Joint Venture Agreement by the
Ministry of Commerce of the PRC.
Other terms
After the 10th anniversary of the establishment of the Joint Venture pursuant to the Supplemental Joint Venture Agreement, in the event that Sharp disposes its interests in the Joint Venture, CEC, CEC Panda, Xingong, Xingang and Top Victory will have the preferential rights in the purchase of such interests.
Sharp has the right to increase its shareholding in the Joint Venture to 20%.
Sharp has the preferential right to acquire the Products up to 50% of production capacity of the Joint Venture.
THE SUPPLEMENTAL INVESTMENT AGREEMENT Date
20 January 2014
Parties
(1) Top Victory; (2) CEC Panda;
(3) Panda LCD; and
(4) CEC.
Panda LCD is a company established in the PRC with limited liability and a non-wholly owned subsidiary of CEC. It is principally engaged in the manufacture of LCD panels and displays.
Key terms of the Supplemental Investment Agreement
All rights and obligations of Panda LCD under the Joint Venture Agreement will be taken up by CEC Panda. Panda LCD and CEC will guarantee the performance of obligations of CEC Panda under the Supplemental Investment Agreement.
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Top Victory may exercise an option (the ''Put Option'') to require CEC Panda or CEC to acquire Top Victory's equity stake in the Joint Venture at a price equivalent to the original registered capital contributed by Top Victory (i.e. RMB140 million (equivalent to approximately US$22 million)) plus an interest which is equivalent to 4% per annum within three years from (i) the fourth anniversary of the registration date of the Joint Venture; and (ii) the date on which the Joint Venture issues its first invoice in relation to the Products, whichever is earlier (the ''Put Option Exercise Date'').
Top Victory will also have the right to exercise at its sole discretion the Put Option at any time prior to the Put Option Exercise Date if (i) the Joint Venture Agreement is terminated pursuant to the Supplemental Joint Venture Agreement; and (ii) the Supply Framework Agreement between the Joint venture and the Company is not entered or signed into within one year from the date of the Supplemental Investment Agreement.
CEC Panda and CEC warrant that the Supply Framework Agreement between the Joint Venture and Top Victory shall be made and entered into within one year from the date of the Supplemental Investment Agreement. The Supply Framework Agreement shall include a term that Top Victory shall have the right of first refusal (save for Sharp's preferential rights to purchase the Products of up to 50% of production capacity of the Joint Venture as mentioned above) to purchase the Products on such terms and conditions to be agreed between the parties in the Supply Framework Agreement. The Supply Framework Agreement will be subject to the approval of the Board and the independent shareholders of each of the Company, China Great Wall Computer Shenzhen Limited and Great Wall Technology Limited as required under the Listing Rules and the listing rules of the Shenzhen Stock Exchange.
Save for the registered capital, Top Victory is not obliged or required to make any additional fund contribution to the Joint Venture, nor provide any guarantee to any borrowings of the Joint Venture.
REASONS FOR AND BENEFITS OF ENTERING INTO THE SUPPLEMENTAL JOINT VENTURE AGREEMENT AND THE SUPPLEMENTAL INVESTMENT AGREEMENT
The Company is a leading display solutions provider. The Group designs and produces a full range of PC monitors and LCD televisions on an ODM basis for its long list of customers which comprise many of the top-tier PC and televisions brands. The Company's products add value to its customers through cost leadership, timely delivery and superior quality. The Group also distributes its products globally under its own brands AOC and Envision. Today, the Company is the world's largest PC monitor manufacturer and fourth largest LCD television maker in terms of unit shipments. The Shares have been primarily listed on the Main Board of the Stock Exchange and secondarily listed on the Singapore Exchange since October
1999.
With the participation of Sharp in the Joint Venture, the Joint Venture can leverage on Sharp's advanced technologies in panel production. By entering into the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement, TPV will continue to enjoy stable panel supply, with its rights under the Joint Venture Agreement being preserved.
The Directors (including the independent non-executive Directors) consider that the terms of the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement are on normal commercial terms and fair and reasonable and the entering into of the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement are in the interests of the Company and the Shareholders as a whole.
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Save for Mr. Liu Liehong, Mr. Lu Ming, Ms. Wu Qun and Mr. Du Heping (who have abstained from voting on the board resolutions regarding the entering into the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement), none of the Directors has a material interest in the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement and the transactions contemplated thereunder.
LISTING RULES IMPLICATIONS
CEC is the controlling shareholder of the Company. CEC Panda and Panda LCD are connected persons of the Company under the Listing Rules by virtue of them being a subsidiary of CEC. The entering into of the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement therefore constitute connected transactions for the Company under Chapter 14A of the Listing Rules. As each of the applicable percentage ratios is less than 5%, the entering into of the Supplemental Joint Venture Agreement and the Supplemental Investment Agreement are subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement of Chapter 14A of the Listing Rules.
DEFINITIONS
''Board'' the board of Directors
''CEC''