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SearchMedia Announces Partial Settlement On Arbitration

Stocks in this article: IDI

SearchMedia Holdings Limited (“SearchMedia” or the “Company”) (NYSE Amex: IDI) (NYSE Amex: IDI.WS), one of China's leading nationwide multi-platform media companies, today announced that it reached settlement agreements for the arbitration between the Company and certain of its predecessor shareholders.

The arbitration was filed between SearchMedia Holdings Limited vs. China Seed Ventures, LP (“CSV”), Qinying Liu, Deutsche Bank AG Hong Kong Branch, Le Yang (collectively, the “Settling Defendants”), and Sun Hing Associates Ltd. and Vervain Equity Investments Limited (“Nan Fung Entities”) related to matters from the Share Exchange Agreement which closed on October 30, 2009. The Settlement Agreements with CSV, Ms. Liu and Ms. Yang are effective immediately while the settlement agreement with Deutsche Bank is conditional upon certain determinations by the arbitration panel. In addition, SearchMedia has reached an agreement with Linden Ventures II BVI Ltd. ("Linden"), a pre-merger investor, in which SearchMedia will repurchase all of their shares outstanding.

Subject to the conditions referred to in the previous paragraph being satisfied, as part of the settlement with the Settling Defendants and Linden, (i) 2.5 million shares will be repurchased by the Company at an average price per share of $0.25 and such shares will be retired, (ii) 2.0 million shares will be surrendered and cancelled without consideration, and (iii) 1.6 million warrants will be surrendered and cancelled without consideration. The cancelled warrants have strike prices ranging from $0.0001 to $7.88 per share. Upon completion of the transactions contemplated by the settlement agreements, the Company will have 17.4 million shares outstanding, including 0.8 million shares recently issued to subsidiaries of the Company in settlement of certain earnout obligations. In addition, as part of the settlement, the Settling Defendants have agreed to forego their right, under a voting agreement, to nominate four members to the SearchMedia board of directors, and Ms. Liu resigned her position as a member of the SearchMedia Board of Directors effective January 23, 2012.

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