BEIJING, Aug. 25, 2016 /PRNewswire/ -- KongZhong
Corporation (NASDAQ: KZ), a leading online games publisher
and developer in the PRC, today announced that its board of
directors (the "Board") has received a revised non-binding proposal
letter, dated August 25, 2016, from
Mr. Leilei Wang, chairman and chief
executive officer of the Company, and IDG-Accel China Growth Fund
II L.P., who, together with certain other parties, formed a buyer
group (the "Buyer Group") to acquire all of the outstanding
ordinary shares of the Company not owned by them or their
affiliates (the "Transaction") for US$7.18 in cash per American depositary share
("ADS", each representing forty ordinary shares), or approximately
US$0.1795 per ordinary share. A copy
of the proposal letter is attached hereto as Exhibit A.
The special committee of the Board (the "Special Committee"),
formed to consider the original proposal by the Buyer Group, is
evaluating this revised proposal with the assistance of its
financial and legal advisors. The Special Committee cautions the
Company's shareholders and others considering trading in the
Company's securities that no decision has been made by the Special
Committee or the Board with respect to the revised proposal. There
can be no assurance that any definitive offer will be made, any
agreement will be executed or that this or any other transaction
will be approved or consummated.
About KongZhong
KongZhong Corporation (NASDAQ: KZ), listed on Nasdaq since 2004,
is a leading online game developer and operator in China. KongZhong operates three main business
units, namely Internet Games, Mobile Games and WVAS. Under Internet
Games, KongZhong operates the largest Chinese military gaming
platform under the "WAR SAGA" brand, which includes games such as
World of Tanks, World of Warplanes and World of Warships. KongZhong
has the exclusive publishing rights for World of Tanks, World of
Warplanes and World of Warships, Guild Wars 2, Auto Club
Revolution, Blitzkrieg 3 and other titles in Mainland China.
Safe Harbor Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements include, without
limitation, statements regarding trends in the wireless value-added
services, wireless media, mobile games and online games industries
and our future results of operations, financial condition and
business prospects. Although such statements are based on our own
information and information from other sources we believe to be
reliable, you should not place undue reliance on them. These
statements involve risks and uncertainties, and actual market
trends and our results may differ materially from those expressed
or implied in these forward looking statements for a variety of
reasons. Potential risks and uncertainties include, but are not
limited to, continued competitive pressure in China's wireless value-added services,
wireless media, mobile games and online games industries and the
effect of such pressure on revenues; our ability to develop new
products that are commercially successful; unpredictable changes in
technology, consumer demand and usage preferences in the markets we
operate; our ability to protect our intellectual property rights;
the short operating history of certain of our business segments, in
particular the online games segment; the state of and any change in
our relationship with China's
telecommunications operators; our dependence on the billing systems
of telecommunications operators for our performance; the outcome of
our investment of operating income generated from the WVAS segment
into the development of our wireless Internet, mobile games and
online games segments; changes in the regulations or policies of
the Ministry of Industry and Information Technology and other
government authorities relevant to our businesses; and changes in
political, economic, legal and social conditions in China, including the Chinese government's
policies with respect to economic growth, foreign exchange, foreign
investment and entry by foreign companies into China's telecommunications and online games
markets. For additional discussion of these risks and uncertainties
and other factors, please see the documents we file from time to
time with the Securities and Exchange Commission. We assume no
obligation to update any forward-looking statements, which apply
only as of the date of this press release.
Exhibit A
August 25,
2016
The Board of Directors
KongZhong Corporation (the "Company")
35th Floor, Tengda Plaza
No. 168 Xizhimenwai Street
Beijing, China 100044
The People's Republic of China
Dear Members of the Board of Directors:
Reference is made to the non-binding preliminary proposal, dated
June 29, 2015 (the "Original
Proposal"), made by Mr. Leilei Wang,
Chairman of the Board of Directors and Chief Executive Officer of
the Company, and IDG-Accel China Growth Fund II L.P., who later,
together with certain other parties, formed a consortium in
connection with the Original Proposal (the "Consortium"), to
acquire all of the outstanding ordinary shares (the "Shares") of
the Company not already owned by the members of the Consortium or
their respective affiliates(the "Acquisition").
We very much appreciate the time spent and efforts made by the
special committee (the "Special Committee") of the Company's board
of directors and its advisors so far to facilitate our due
diligence and negotiate the definitive agreements providing for the
Acquisition. We are submitting this revised non-binding proposal to
reaffirm our interests in the Acquisition and to revise our offer
price (the "Offer Price") to US$7.18
in cash per American Depositary Share of the Company ("ADS", each
representing forty Shares), or US$0.1795 in cash per Share, which represents a
premium of approximately 20% to the average closing price of the
Company's ADSs over the last 30 trading days and a premium of
approximately 12% to the closing price of the Company's ADS on
August 24, 2016, the last trading day
prior to the submission of this revised proposal.
Our decision to revise the Offer Price has been a difficult one
to make but is necessitated by the tougher than expected market
conditions faced by the Company and the Chinese economy. In
particular,
- The global financial markets have experienced significant
volatility recently, including substantial volatility in equity
securities markets and volatility and tightening of liquidity in
credit markets. In particular, the closing price of the Company's
ADSs on August 24, 2016 has decreased
to US$6.41 per ADS. These
developments have negatively affected our ability to raise the
necessary debt anticipated by our Original Proposal.
- China's GDP growth rate was
6.9% in 2015, which was the lowest in the past 25 years. The
economic slowdown and challenges to the macroeconomic environment
in China are expected to be
sustained, with RMB under strong depreciation pressure. Since the
announcement of the Original Proposal on June 29, 2015, RMB has depreciated against U.S.
dollar from RMB6.2085 per USD
(June 29, 2015) to RMB6.6515 per USD (August
19, 2016), representing a 7.14% decline, according to the
exchange rates issued by the Federal Reserve Board. The
depreciation trend of RMB is expected to continue, resulting in a
negative impact on the valuation of the Company in U.S. dollar
terms. Furthermore, our cost of funding associated with the
financing for the Acquisition rises with a stronger U.S.
dollar.
- Due to the A-share stock market crash in 2015, China-based private equity funds became very
cautious in providing equity financing for the transactions similar
to the Acquisition. These developments have negatively affected our
ability to raise the necessary equity financing anticipated by our
Original Proposal.
In closing, we continue to be fully committed to close the
Acquisition and believe that the Acquisition provides full value to
the Company's shareholders. We hope that the Special Committee will
give prompt consideration to our proposal and we are prepared to
execute the definitive agreements on an expedited basis.
Should you have any questions regarding this proposal, please do
not hesitate to contact the undersigned. We look forward to hearing
from you.
By:
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/s/ Leilei
Wang
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Leilei
Wang
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Right Advance
Management Ltd.
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By:
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/s/ Leilei
Wang
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Name: Leilei
Wang
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Title: Authorized
Signatory
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Chiming Bells
International Limited.
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By:
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/s/ Leilei
Wang
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Name: Leilei
Wang
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Title: Authorized
Signatory
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IDG-Accel China
Growth Fund II L.P.
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By:
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IDG-Accel China
Growth Fund II Associates L.P., its General Partner
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By:
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IDG-Accel China
Growth Fund GP II Associates Ltd., its General Partner
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By:
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/s/ CHI SING
HO
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Name: CHI SING
HO
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Title: Authorized
Signatory
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IDG-Accel China
Investors II L.P.
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By:
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IDG-Accel China
Growth Fund GP II Associates Ltd., its General Partner
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By:
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/s/ CHI SING
HO
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Name: CHI SING
HO
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Title: Authorized
Signatory
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Shanghai Trend Asset Management
Center (Limited Partnership)
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By:
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/s/ Hu
Shiqiong
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Name: Hu
Shiqiong
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Title: Executive
Partner
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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/kongzhong-announces-receipt-of-revised-non-binding-proposal-to-acquire-the-company-300318203.html
SOURCE KongZhong Corporation