Speaking on behalf of the CDC and Lunar, Maria Tsui, spokesperson for LCM, stated, "We believe that Linktone's shareholders would benefit tremendously if the board of directors were to approve our proposed transaction. We are presenting this proposal in a spirit of good faith because we firmly believe that it is clearly in the best interest of shareholders, and would assist the company in meeting its goals of building a stronger business in China. Furthermore, we intend to fully involve management and make this a team effort to transition back to profitability and increased value. Lastly, we believe that the operational expertise that the Strategic Investors can deliver to the company will result in an ability to generate greater returns from Linktone's tangible and intangible assets for shareholders."
They have proposed to purchase either common shares or convertible preferred shares convertible into a minimum of 19.9% of the fully-diluted equity capitalization of Linktone. The purchase price would be at a premium to Linktone's most recent closing price, in the case of convertible preferred shares, or at a discount, in the case of common shares. The two companies would seek to appoint up to three directors to Linktone's Board of Directors in order to effect a proposed restructuring of Linktone's business. Furthermore, the Strategic Investors would enter a lock up agreement not to sell the shares for a minimum of 6 months. The consideration for the transaction will be made entirely in cash.
The companies believe they have the operational expertise and skill set necessary to work with the Linktone to effect a restructuring of the business, and they say that this proposal offers an exciting opportunity for Linktone shareholders.
In the restructuring, they propose three areas of concentration. First, they will restructure its core wireless value-added services business through cost cutting, product refocus and leveraging greater synergies with partner companies. next, they will restructure new media assets into a separate stand-alone entity with greater access to media expertise and clearer performance metrics. Third, they will build a pipeline of transformative transactions aimed at increasing shareholder value through leveraging combined resources.