BEIJING , Feb. 3 /PRNewswire-Asia-FirstCall/ -- China TransInfo Technology Corp., (Nasdaq: CTFO) ("China TransInfo" or "the Company"), a leading provider of public transportation information systems technology and comprehensive solutions in the People's Republic of China ("PRC"), today announced that it has completed its corporate restructuring by entering into a series of contractual arrangements with various parties to more clearly separate its business segments and centralize business management ("VIE Restructuring"). In addition, the new corporate structure will allow the Company to expand business areas within the guidelines of Chinese government regulations.
Prior to the VIE Restructuring, Beijing PKU Chinafront High Technology Co., Ltd. ("PKU"), a major PRC operating subsidiary of China TransInfo, wholly or majority owned China TransInfo's other PRC operating entities including Beijing Tian Hao Ding Xin Science and Technology Co., Ltd., Beijing Zhangcheng Culture and Media Co., Ltd., Beijing Zhangcheng Science and Technology Co., Ltd., and recently acquired China TranWiseway Information Technology Co., Ltd. and Shanghai Yootu Information Technology Ltd.
Following the VIE Restructuring, China TransInfo Technology Group Co., Ltd. ("China TransInfo Group"), a newly formed PRC holding company, directly or indirectly holds ownership of the aforementioned operating entities, including PKU. China TransInfo Group is fully owned by four Chinese citizens who are affiliates of the Company: Shudong Xia , the Company's Chairman, CEO and President and the beneficial owner of approximately 43% of the Company's outstanding capital stock, Zhiping Zhang , the Company's Vice President of Research and Development, Zhibin Lai , the Company's Vice President and Wei Gao , the designee of SAIF Partners III L.P., the 11% shareholder of the Company.
Under the former structure, PKU and PKU's operating PRC subsidiaries were not considered domestic Chinese entities due to their status as indirect subsidiaries of China TransInfo, PKU's US-listed parent Company. For this reason, the Company was restricted from engaging in certain business activities, including online services, taxi advertising, and security and surveillance related business in China under Chinese law. Following the VIE Restructuring, all of China TransInfo's former operating entities are now subsidiaries of China TransInfo Group, which is wholly owned by four Chinese citizens, designating the entities as domestic operations. Through a series of contractual arrangements made among relevant parties, China TransInfo will continue to maintain substantial control over these operating entities' daily operations and financial affairs. In addition, China TransInfo is entitled to consolidate the financial results of these affiliated companies in its own consolidated financial statements under FASB Interpretation No. 46R "Consolidation of Variable Interest Entities." As a result, China TransInfo's financial statements will continue to reflect the same business activities as before the VIE Restructuring while allowing the company to grow in compliance with Chinese law.
"We are very pleased to complete our reorganization by making the VIE arrangement with China TransInfo Group, which will provide an efficient structure to continue growing our business," commented Mr. Shudong Xia , chief executive officer of China TransInfo. "The new streamlined corporate structure has more clearly defined our business segments, enabling us to more efficiently leverage our resources and develop our business in different areas."
More information on the reorganization is available in the definitive Information Statement on Schedule 14C filed with the U.S. Securities and Exchange Commission on January 12, 2009 .
The charts below indicate the Company's organizational structure before and after the VIE Restructuring. http://www.prnasia.com/xprn/sa/attachment/2009/02/20090203-937128.jpg