Judge rules on VisionChina case

DGM's investors, US-based Oak Investment Partners and China-based Gobi Partners, previously filed two lawsuits regarding VisionChina's $160 million acquision of their portfolio company DGM in November 2009. Among their charges was VisionChina's willful reneging on a $30 million payment scheduled as part of the acquisition, saying that VisionChina paid the initial amount due but failed to make the second payment of $30 million by November 2010. The final $30 million payment is due this week.

Oak and Gobi anticipate more than $90 million in total damages stemming from their lawsuit. Their case prompted Judge Charles Ramos to say that Oak and Gobi, "have demonstrated that it is more likely than not [they] will succeed on the merit of [their] claims."

"Drawing all legitimate inferences in their favor, the sellers make a showing that the Merger Agreement is a binding and valid contract ... which VisionChina breached by failing to pay the first and subsequent payments due," Ramos said, according to a statement issued by DGM's investors.

VisionChina filed a Notice of Appeal last Friday. As of June 30, 2011, VisionChina reported having $123.5 million in cash and cash equivalents on hand.

VisionChina previously claimed that DGM's investors had also acted in poor faith. Following its merger with DGM, VisionChina's stock price suffered in 2010, including a single-day drop of 37%. VisionChina tried to re-negotiate the terms of the anniversary payments, but was turned down because the deal was brokered nearly a year earlier. The process led VisionChina to launch a lawsuit of its own based on the notion that DMG's former shareholders had acted fraudulently.

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• Topics
• Greater China
• Media
• Technology
• Venture
• China
• Venture
• TMT
• Gobi Partners
• Oak Investment Partners