TCL Corporation Receives Approval from CSRC on Private Placement

TCL Corporation Receives Approval from CSRC on Private Placement

December 09th,2008

November 21, 2008 -- TCL Corporation announced that its private placement proposal was approved today by the Share Issuance Examination Committee of the CSRC. This indicates that TCL has made significant progress in its plan to finance construction of two LCD TV module plants with the funds raised hence.

TCL's private placement proposal was to privately issue shares to no more than 10 institutional investors via non-public offerings of stock to raise up to RMB 1.39 billion, which will mainly be used to finance LCD TV module projects. TCL Chairman Li Dongsheng will subscribe to 18% of the issued shares as a strategic investor.

Being one of the key components of LCD TV, LCD modules account for 35%-40% in the entire value chain of color TV sets. Once completed, TCL LCD module projects will provide solid support for the company's LCD assemblies, which are experiencing rapid growth. In addition, it will also help to deepen the collaboration with flat-panel and IC manufacturers, benefiting from technical development trends and support, shortening the new products to market cycle and responding in shorter timeframe to market conditions and new technology trend.

At the same time, it will also reduce costs for the company by improving the design and control capabilities of key parts and components. The gradual localization of parts and components will also comprehensively enhance the company s cost control capability. The integrated assembling process will lead to direct connection, thus reducing intermediate links and packaging and logistical costs and improving turnover efficiency.

Moreover, the internal standardization and external differentiation of module products will achieve highly efficient technical innovation in modules and on assembly lines. Therefore, this project not only meets the production needs of manufactures, but also makes profits itself.

Given the ever changing macro-environment of the capital market, the implementation of TCL's private placement proposal has been quite a bumpy ride. However, approval from the CSRC shows that the company s prospects in the LCD TV market have finally obtained affirmation from the regulatory agencies, which not only enhances the company s confidence in its future development, but also conveys a positive signal to the market.

Along with the central government investment of RMB 4 trillion to stimulate domestic demand and to support financial markets, the CSRC will re-start the approval process for share expansion applications of listed companies. This reflects the strong support from governing bodies to companies with great development prospects.

While applying for private placement, TCL Corporation has already started project construction using its own funds, which reflects TCL s determination to develop the LCD TV business. The LCD module project, which is funded by TCL in partnership with Samsung Electronics providing LCD panels and relevant support, officially started in Huizhou on April 15 this year. In September, main parts of major plants of the module project were completed. Production equipment has also been installed this month.

According to TCL's performance reports for the third quarter, the company has sold a total of 2.693 million LCD TV sets globally in the first nine months of 2008, which represents a 244.4 % increase over the same period last year and is well above the industry growth rate. TCL is speeding up its pace to enhance its global presence, and the launch of LCD module projects will be conducive to the realization of this influence.

TCL color TV has started its "winter promotion campaign" for LCD TV products ahead of time. A number of best-selling mainstream models of LCD TVs are popular among consumers. The natural light technology developed by the company has been applied to the E9 and X9 LCD TV product series, which brings a new experience to consumers and stimulates continuous growth in sales. In addition, benefiting from the Home Appliances Go to the Countryside Program, TCL LCD TV is expected to make greater breakthroughs in rural markets.

In addition, the innovation capability of TCL LCD TV sets has also received market recognition. At the fourth China Audio & Video Industry Technology Trends and Application Forum on November 13, 2008, TCL CD TV E9 series and its X9, which is the world s first high-definition interactive television and has just appeared on the market, gained advanced insight into consumer demands and reflected the development trends of the audio and video industry, thus both won the "2008 China Audio and Video Industry Product Innovation Award" with their innovative functions and excellent industrial design.