China Digital Culture (08175) has entered into a MEMORANDUM of Understanding (MOU) with DJ Creative Venture for the sale of certain entities and interests for HK $18m

2022-06-07 0 By

Digital Culture China (08175) announces that on 30 March 2022, the Company (the Seller) has entered into a non-legally binding Memorandum of understanding with the potential buyer DJ Creative Venture Ltd.Pursuant to the MOU, the Potential Buyer proposes to acquire and the Seller proposes to sell the Target interest and target rights (proposed sale matters) beneficially held by the Seller in the Target Entity.As of the date of this publication, the Seller holds certain shares and interests (The Target interest) and certain contractual rights (the Target Right;Together with the Target interests collectively referred to as the “Target Assets”) directly and/or indirectly controls, manages and operates the JTeam business and brand.The target entity and target interests are as follows: 1. 56.37% of all issued and outstanding capital stock of Jieyi Cultural And Creative Co., LTD.The company is an indirect wholly-owned subsidiary of the company, mainly engaged in training, training and management of e-sports teams and e-sports anchors.2. 100% equity of Beijing Oriental Ideal Culture Communication Co., LTD., which holds (1) 100% equity of Beijing Star Dream Culture Co., LTD., while Beijing Star Dream Culture Co., LTD., holds 100% equity of Horguosi Jiesuo Culture Communication Co., LTD.;(2) 100% equity of Shanghai Xinke Culture Communication Co., LTD.And (2) 51% equity of Beijing Digital Weixi Cultural Creative Co., LTD.3. 70% of the issued share capital of VG JLLC.The company, 70% owned by the company, is mainly engaged in the management and operation of professional e-sports teams.4. 70% equity of Dalian Jielen E-Sports Service Co., LTD.The company, which is 70% owned by the company, is mainly engaged in the operation of e-sports related events.5. A capital commitment of RMB 10 million as a Limited partner of Beijing Cultural Capital Digital Investment Fund Management Center (Limited partnership) entitle the holder to an economic interest arising from or in connection with certain B+ Series preferred shares of VSPN Group Limited.Object rights include:1. Licensee’s contractual rights under the License Agreement entered into by Eastern Eagle Investment Company Limited(as licensor) and China Digital Culture (Group) Co., LTD. (as licensee) dated April 4, 2016,Its maturity should have been extended to no earlier than 3 April 2028;2. All intellectual property rights relating to “JTeam”, including all rights of the “JTeam” trademark and the legal and beneficial owner of the “JTeam” brand and assets under the material contract, including but not limited to: a) use of the JTeam brand in esports related activities in China;B) Use JTEAM brand in e-sports education business in China;And c) develop and sell products under the JTEAM brand.3. Subject to the validity of the License Agreement, the potential buyer shall provide the Seller with a non-exclusive license to use the above.The seller suggested selling and the potential buyer suggested buying the target asset at a total cost of about HK $18m.The proposed sale, if implemented, will generate an immediate cash inflow of approximately HK $18 million, which will greatly assist the Company in meeting its working capital requirements and improving its cash flow position.