30 December 2010

Great Wall Kaifa, Epistar, Evertop and Country Lighting form KFES Lighting

Agreement has been reached to form a joint venture named KFES Lighting Co Ltd in Xiamen, Fujian province, China, to be owned 44% by Great Wall Technology Co Ltd subsidiary Shenzhen Kaifa Technology Co Ltd (Great Wall Kaifa), 40% by Epistar JV Holding (BVI) Co Ltd, 9% by Evertop (Fujian) Optoelectronics Co Ltd and 7% by Country Lighting (BVI) Co Ltd.

Capital injections of $52.8m, $48m, $10.8m and $8.4m respectively (each in two stages in cash) amount to registered capital of $120m ($80m in the first stage; $40m in the second stage). Total investment will be $160m. The final name of the limited liability company is subject to approval by the relevant government authorities.

KFES Lighting’s board will consist of seven directors: three appointed by Great Wall Kaifa, two by Epistar, and one each by Evertop and Country Lighting. The chairman and vice-chairman of the board will be appointed by Great Wall Kaifa and Epistar, respectively. The chairman will also be the legal representative of the JV.

All JV partners are based in China, except for Country Lighting (BVI) and Epistar JV Holding (BVI), which are investment holding companies incorporated in the British Virgin Islands. Taiwan-based parent firm Epistar Corp makes LED epiwafers and chips. Evertop designs and makes LED-related components and modules (as well as providing after-sales services). Great Wall Technology develops and provides personal computers and information terminal products, storage products, power supply products, monitoring terminal, LCD TV products and EMS business. Great Wall Kaifa (which is listed on the Shenzhen Stock Exchange) manufactures HDD magnetic heads, remote control meters, tax-control products, memory modules, video heads and automation equipment.

KFES Lighting’s scope will include the research, manufacture and sale of LED wafers, chips, light sources, light source modules and LED lighting, as well as the provision of after-sales services.

The investors have also entered into an agreement with the management committee of Xiamen Torch Hi-Tech Industrial Development Zone to establish the JV there. Support to be provided by Xiamen Torch Hi-Tech Industrial Development Zone includes preferential tax treatment and subsidies for the purchase of metal-organic chemical vapor deposition (MOCVD) equipment for manufacturing LEDs.

The LED wafers and chips will be used mainly for products made by the JV as well as satisfying the internal demand of Great Wall Kaifa and Evertop (and their respective strategic partners), which will be given priority in purchasing the JV’s products. In the case that the JV out-sources LED chip packaging, light sources or light source modules, it will first purchase them from the JV partners and their associates (provided that the terms are reasonable under the prevalent market conditions).

Great Wall Kaifa says that, in view of the great prospects for LED products, its board of directors intends to eventually increase the registered capital and total investment in the JV to $240m and $490m, respectively, after completion of the installation of the first 30 MOCVD reactors. Such an increase in capital contribution and its timing will depend on the market situation and will be carried out pursuant to the relevant authorization and approval procedures.

Tags: Epistar LEDs MOCVD

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