Hartcourt Announces Acquisition of Beijing Challenger Group of Companies,Key Distributor of IBM Products
LOS ANGELES, Dec 16, 2003 /PRNewswire-FirstCall via COMTEX/ -- The Hartcourt Companies, Inc. (OTC Bulletin Board: HRCT) (Frankfurt: 900009), www.hartcourt.com , China's fastest growing IT distribution and retail company, announced today that it has signed a definitive agreement to purchase 51% percent of Beijing Challenger group of companies, comprised of four wholly owned companies located in Beijing and one located in Shanghai. The Challenger acquisition effectively placed Hartcourt into the Top 5 ranking in the IT distribution and retail sector and its entry into the very important Northern China market.
The purchase price for 51 percent of Challenger is 31.3 Million RMB (US$3.8 Million) payable in 6,324,748 restricted common shares of Hartcourt, calculated at US$0.60 a share, and an investment of 5 Million RMB (US$610,000) into one of the wholly-owned subsidiaries of Challenger to strengthen its growth. The management team of the group will hold the remaining 49% of Challenger.
Started in 1995, Challenger is currently one of the key regional distributors and marketing partners for IBM (www.ibm.com). Challenger's five subsidiaries specialize in the full range of IBM products including NT server, UNIX server, storage devices, notebook and desktop computers, as well as offering complete range of integrated solutions to its customers in corporate, education, defense, banking, telecommunication and government sectors. Its sales network covers the Northern China market including Beijing, Tianjin, Shandong, Shanxi, Hebei, Henan, and Inner Mongolia.
For the first 10 months of 2003, Challenger recorded combined revenue of RMB 448 mil (US$54.4 Million) and profit of RMB 8.4 mil (US$1.0 Million). Projected revenue and net profit for 2003 are RMB 537.6 Million (US$ 65.2 Million) and RMB10.1Million (US$1.22 Million), respectively. The 5 Hartcourt subsidiaries, Huaqing, Guowei, Newhuasun, Zhongnan, and Pengyang, are projected to reach RMB 1,530 Million (US$185 Million) in revenue and RMB 26 Million (US$ 3.2 Million) in net profit in 2003. The consolidated revenue and earning of these two groups on an annualized basis would be US$ 250.2 Million in revenue and US $4.19 Million in net profit.
More details on Challenger could be obtained from its Web sites, www.changdegroup.com, www.shhelian.com or www.itserver.com.cn.
Mr. Song Ming, Chairman of Challenger Group, comments, "We are excited to join Hartcourt's fast growing network of distribution channels. The synergy with current Hartcourt subsidiaries will enable us to improve our profit margin and financial management. We look forward to contribute strongly to Hartcourt's growth, and we hope to tap into the resources of Hartcourt worldwide to expand strategically with more American and European partners."
The Hartcourt Companies, Inc. is one of China's fastest growing companies in the IT distribution and retail services sector. Hartcourt's growth strategy is to acquire controlling interests in profitable companies with proven management within this sector in key geographical areas of China. Recent acquisitions of Hartcourt included six key IT distribution and retail services companies covering all major regions of China that have highest GDP-per-capita in China. Detailed information on Hartcourt can be obtained from our Web site, www.hartcourt.com.
The statements made in this press release, which are not historical facts, contain certain forward-looking statements concerning potential developments affecting the business, prospects, financial condition and other aspects of the company to which this release pertains. The actual results of the specific items described in this release, and the company's operations generally, may differ materially from what is projected in such forward-looking statements. Although such statements are based upon the best judgments of management of the company as of the date of this release, significant deviations in magnitude, timing and other factors may result from business risks and uncertainties including, without limitation, the company's dependence on third parties, general market and economic conditions, technical factors, the availability of outside capital, receipt of revenues and other factors, many of which are beyond the control of the company. The company disclaims any obligation to update information contained in any forward-looking statement.
SOURCE Hartcourt Companies, Inc.
CONTACT: Ms. Cathy Kuang of Hartcourt Companies, Inc., + 8621 5213 0673,
or Fax, + 8621 5213 0664, firstname.lastname@example.org