Refond Corrects Earlier Announcement of Shares Purchased from LT Photoelectricity Technology

Last Friday, Refond Optoelectronics (Refond) announced the acquisition of 13.04 percent share of Shenzhen LT Photoelectricity Technology Co. for RMB 30 million (US $4.9 million) through a preferred stock purchase agreement signed with Peng Xiaoling and Wang Weiquan. Refond however has corrected the announcement, reporting that the company purchased 15 percent share.

When the news was first announced, LT Photoelectricity Technology made a promise that the company’s net profit would not fall below RMB 24 million in 2014. If it does, the company must compensate Refond through cash or stock shares.

Only four days after the announcement, Refond corrected the statement saying that the company actually purchased 15 percent in shares and not 13.04 percent as originally reported.

Upon correcting the announcement, LT Photoelectricity Technology reported that the company promised that after tax profit margin from 2014 to 2017 would not be lower than RMB 100 million. Additionally, the lowest after tax profit margin should not be lower than the following: RMB 22 million for 2014, RMB 24 million for 2015, RMB 26 million for 2016, and RMB 28 million in 2017. If the company’s operational performance fails to meet the above targets in any year, it must compensate Refond through cash or stock shares.

This indicates that LT Photoelectricity Technology’s market price has dropped from RMB 231 million to RMB 200 million. Refond acquired 15 percent share in the company at a rate of 17 times PE ratio.

The mistake in the original announcement was due to an employee oversight, said Refond.

Industry insider analyses or higher than original assessment of LT Photoelectricity Technology by Refond perhaps lead to this mix up.

(Author: Amber, Reporter, LEDinside)

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