HTC Investors

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The Board resolved the purchase of 100% shareholding in S3 Graphics by executing capital injection into HTC Investment One (BVI) Corporation.
1.Name and nature of the subject matter (if preferred shares, the terms and conditions of issuance shall also be indicated, e.g.dividend yield):
(1)HTC’s capital injection into HTC Investment One (BVI) Corporation
(2)HTC Investment One (BVI) Corporation’s purchase of 100% shareholding in S3 Graphics Co., Ltd.
(3)Acquisition of entire patent portfolio owned by S3 Graphics Co., Ltd. covering key graphics technologies.

2.Date of occurrence of the event:2011/07/06

3.Volume, unit price, and total monetary amount of the transaction:
(1)HTC’s capital injection into HTC Investment One (BVI) Corporation
Volume: 300,000,000 shares
Unit Price: USD 1
Total monetary amount of the transaction: USD 300,000,000
(2a)HTC Investment One (BVI) Corporation’s purchase of Class D shares in S3 Graphics Co., Ltd. from related party VIABase Co., Ltd.
Volume: 47,726,759 shares
Unit Price: approximately USD 3.08
Total monetary amount of the transaction: approximately USD 147,000 thousand
(2b)HTC Investment One (BVI) Corporation’s purchase of Class E shares in S3 Graphics Co., Ltd. from related party WTI Investment International, Ltd. (BVI)
Volume: 338,611,757 shares
Unit Price: approximately USD 0.4518
Total monetary amount of the transaction: approximately USD 153,000 thousand

4.Counterpart to the trade and its relationship to the Company (if the trading counterpart is a natural person and furthermore is not an actual related party of the Company, the name of the trading counterpart is not required to be disclosed):
(1)N/A
(2a)VIABase Co., Ltd.; 100% owned by HTC’s affiliate - VIA Technologies, Inc.
(2b)WTI Investment International, Ltd. (BVI); HTC’s Chairman is its major indirect shareholder

5.Where the counterpart to the trade is an actual related party, a public announcement shall also be made of the reason for choosing the related party as trading counterpart and the identity of the previous owner (including its relationship with the company and the trading counterpart), price of transfer, and date of acquisition:
(1)The reason for choosing the related party as trading counterpart: S3 Graphics Co., Ltd. owns patents on key graphics technologies which can strengthen HTC’s patent portfolio. After HTC’s internal evaluation, it was approved by the Board of Directors to obtain the full and complete right and ownership of all patents owned by S3 Graphics Co., Ltd. through the purchase of 100% shareholding in S3 Graphics Co., Ltd. from related parties WTI Investment International, Ltd. (BVI) and VIABase Co., Ltd.
(2)The identity of the previous owner, price of transfer, and date of acquisition: N/A

6.Where a person who owned the property within the past five years has been an actual related person of the company, a public announcement shall also include the dates and prices of acquisition and disposal by the related person and the person’s relationship to the company at those times:N/A

7.Matters related to the creditor's rights currently being disposed of (including types of collateral of the disposed creditor's rights; if the creditor's rights are creditor's rights toward a related person, the name of the related person and the book amount of the creditor's rights toward such related person currently being disposed of must also be announced):N/A

8.Anticipated profit or loss from the disposal (not applicable in cases of acquisition of securities) (where originally deferred, the status or recognition shall be stated and explained):N/A

9.Terms of delivery or payment (including payment period and monetary amount), restrictive covenants in the contract, and other important stipulations:
(1)Terms of delivery or payment: Payment will be made according to the contract after approval by the related authorities.
(2)Restrictive covenants in the contract, and other important stipulations: None

10.The manner in which the current transaction was decided, the reference basis for the decision on price, and the decision-making department:The transaction amount was negotiated by both parties involved and approved by the Board of Directors based on the appraisal value of patents owned by S3 Graphics Co., Ltd. and PricewaterhouseCoopers International Limited’s opinion regarding the reasonableness of the transaction price.

11.Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g.pledges):
(1)Cumulative shareholding of HTC Investment One (BVI) Corporation owned by HTC Corporation is 300,000,000 shares and amount is USD 300,000,000. Shareholding percentage is 100%. There is no restriction of rights.
(2)Cumulative shareholding of S3 Graphics Co., Ltd. owned by HTC Investment One (BVI) Corporation is Class D shares 47,726,759 shares and Class E shares 338,611,757 shares and total amount is USD 300,000,000. Shareholding percentage is 100%. There is no restriction of rights.

12.Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder's equity as shown in the most recent financial statement and the operating capital as shown in the most recent financial statement:
(1) Ratio of the total amount of long or short term securities investment (including the current trade) to the total assets on the financial statement for the most recent period:
HTC Corporation: 11.53%
(2) Ratio of the total amount of long or short term securities investment  (including the current trade) to the shareholder's equity on the financial statement for the most recent period:
HTC Corporation: 27.89%
(3) Operating capital as shown in the most recent financial statement:
HTC Corporation: NTD 56,438,796 thousand

13.Broker and broker's fee:None

14.Concrete purpose or use of the acquisition or disposition:To strengthen HTC’s patent portfolio and enhance HTC's competitive position.

15.Net worth per share of company underlying securities acquired or disposed of:USD 0.0155 (approximately NTD 0.4464, exchange rate 28.801)

16.Do the directors have any objection to the present transaction?:None

17.Has the CPA issued an opinion on the unreasonableness of the price of the current transaction?:No

18.Any other matters that need to be specified:
(a)Net value per share refers to the estimated net value per share of S3 Graphics Co., Ltd. when this project is completed.
(b)Transaction amount per share is temporarily calculated by the total transaction price of USD 300 million divided by the total shares of Class D shares (47,726,759 shares) and Class E shares (338,611,757 shares) due to the restriction from the declaration format, actual transaction amount per share of Class D share and Class E shares is approximately USD 3.08 and USD 0.4518.