VisionChina (VISN) Required to Transfer $60M to NY Sheriff's Office Connected to Digital Media Acquisition

August 15, 2012 3:37 PM EDT
The New York State Supreme Court has issued a written order requiring VisionChina Media, Inc. (Nasdaq: VISN) and its subsidiary, Vision Best Ltd., to transfer $60 million into New York State by August 21, 2012 where the money will be held in the custody of the New York City's Sheriff's office or deposited into an escrow account controlled by the Sheriff.

The Court order is the latest in a series of legal victories for Gobi Partners and Oak Investment Partners in their legal campaign to ensure that VisionChina and its subsidiary comply with their contractual obligation to pay for their acquisition of Digital Media Group (DMG).

Oak and Gobi plan to pursue additional damages against VisionChina and its subsidiary and believe that the total damages, initially estimated at more than $90 million, now exceed $100 million as a result of the company's refusal to pay Oak and Gobi for the DMG acquisition.

VisionChina acquired DMG from Gobi and Oak in January 2010, pursuant to a Merger Agreement that required VisionChina to make an initial payment of $100 million in cash and stock and two deferred payments of $30 million each over the next two years. DMG operated China's leading digital media network inside subway systems consisting of over 34,000 digital screens in 32 subway, high-speed train lines and bus shelters.

VisionChina failed to make the two deferred payments, totaling $60 million. The Court's latest decision ensures that the funds will be available to Gobi and Oak should a final ruling uphold their claim to the payments.

The case, Shareholder Representative Services, LLC, et al. v. VisionChina Media Inc., et al, was filed in the Supreme Court of the State of New York, New York County, index # 650526/2011. There is also a related case, VisionChina Media Inc., et al., v. Shareholder Representative Services, LLC, et al., index # 652390/2010.

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