Filing Details

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SCHEDULE 13D

(1)

Percentage calculated based on the 35,449,485 ordinary shares, par value $0.00375 per share (“Ordinary Shares”) outstanding reported by UTStarcom Holdings Corp. (the “Issuer”) in Item 6 of its Annual Report on Form 20-F filed with the Securities and Exchange Commission (the “SEC”) on November 14, 2017.

 

 

 

The name, business address, present principal occupation or employment and the citizenship of each director and executive officer of each member of the Tonghao Group, other than Mr. Qiao, is set forth in Schedules I through VI hereto and are incorporated herein by reference.

(d-e)              During the last five years, no member of the Tonghao Group and, to the best of each such Tonghao Group member’s knowledge, none of the directors or executive officers of such Tonghao Group member listed in Schedules I through VI hereto, have been: (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

ITEM 3.

Source and Amount of Funds or Other Consideration

Pursuant to a purchase and sale agreement dated October 30, 2017 (the “Dasan Purchase Agreement”), Tonghao Shanghai agreed to acquire 1,523,241 Ordinary Shares at $3.25 per share for an aggregate purchase price of $4,950,533.25 from Dasan Networks, Inc. (“Dasan”).  Pursuant to an assignment and assumption agreement dated November 14, 2017, Tonghao Shanghai transferred all of its rights and obligations under the Dasan Purchase Agreement to Tonghao Cayman.  Although Tonghao Cayman notified Dasan that all conditions to closing had been satisfied, Dasan has failed to perform its obligations and has not to date transferred the purchased Ordinary Shares to Tonghao Cayman.  Tonghao Cayman intends to enforce its rights under the Dasan Purchase Agreement.

Pursuant to a purchase and sale agreement dated October 30, 2017 (the “NAM Purchase Agreement”), Tonghao Shanghai agreed to acquire 36,000 Ordinary Shares at $3.25 per share for an aggregate purchase price of $117,000 from Min Woo Nam (“NAM”), a natural person who is the Chairman of Dasan.  Pursuant to an assignment and assumption agreement dated November 14, 2017, Tonghao Shanghai transferred all of its rights and obligations under the NAM Purchase Agreement to Tonghao Cayman.  Although Tonghao Cayman notified NAM that all conditions to closing had been satisfied, NAM has failed to perform its obligations and has not to date transferred the purchased Ordinary Shares to Tonghao Cayman.  Tonghao Cayman intends to enforce its rights under the NAM Purchase Agreement.

Pursuant to a purchase and sale agreement dated November 1, 2017 (the “Invex Purchase Agreement,” and together with the Dasan Purchase Agreement and the NAM Purchase Agreement, the “Purchase Agreements”), Tonghao Shanghai agreed to acquire 3,500,000 Ordinary Shares (the “Purchased Shares”) from Invex Casa de Bolsa S.A. de C.V., Invex Grupo Financiero (“Invex”), a corporation incorporated under the laws of Mexico, at a price of $3.30 per share, for an aggregate purchase price of $11,550,000.  Pursuant to an assignment and assumption agreement dated November 14, 2017, Tonghao Shanghai transferred all of its rights and obligations under the Invex Purchase Agreement to Tonghao Cayman.  On November 28, 2017, Invex and Tonghao Cayman mutually agreed on the mechanics of closing and the transactions contemplated by the Invex Purchase Agreement were consummated.

 

 

As a result of the assignment of the Invex Purchase Agreement from Tonghao Shanghai to Tonghao Cayman and the closing of the transactions contemplated by such agreement, Tonghao Cayman may be deemed to have acquired beneficial ownership of 3,500,000 Ordinary Shares, or 9.9% of the total outstanding shares of the Issuer as of November 14, 2017.  Tonghao Cayman obtained the funds to purchase the Ordinary Shares from contributions from the other members of the Tonghao Group.

ITEM 4.

Purpose of Transaction

The Tonghao Group purchased the Ordinary Shares beneficially owned by them with a view towards acquiring additional Ordinary Shares and becoming the largest shareholder of the Issuer.  In the event that the transactions contemplated by the Dasan Purchase Agreement and the NAM Purchase Agreement are consummated following resolution of the disputes with respect thereto, the percentage of Ordinary Shares beneficially owned by the Tonghao Group will increase to approximately 14.4%.  The Tonghao Group will review its investment in the Issuer on a continuing basis and, depending on general market and economic conditions, the performance and prospects of the Issuer, other investment opportunities available to the members of the Tonghao Group, the market price of the Ordinary Shares and other investment considerations, factors and future developments, the Tonghao Group may at any time and from time to time (subject to applicable law) hold, vote, acquire or dispose of or otherwise deal with securities (through open market purchases, private agreements with the Issuer or other parties, or otherwise, as applicable), or suggest or take a position with respect to the management, operations or capital structure, of the Issuer.

The Tonghao Group, as a significant and active shareholder holding approximately 9.9% of the Issuer’s outstanding Ordinary Shares and with the intention of becoming the largest shareholder of the Issuer, has engaged, and intends to continue to engage, in communications with the Issuer’s directors, management and other stockholders regarding potential areas for future cooperation with the goal of improving the Issuer’s business and financial performance.  Such discussions could include, but would not be limited to, the business, operations, investment strategy and portfolio, including with respect to industrial integration, financial condition, corporate governance, management, and future plans (including proposed corporate transactions of a significant nature) of the Issuer, including any plans or proposals regarding the same, as well as any other matters which the Tonghao Group believes could be relevant to preserving and increasing the value of its investment in the Issuer’s Ordinary Shares and efforts to increase shareholder value generally.

The Tonghao Group has not developed specific topics for such discussions or prepared or developed any specific plans or proposals relating to the Issuer, but they believe that possible matters for consideration could include, among other possibilities, the acquisition of all of the outstanding Ordinary Shares that are not already owned by the Tonghao Group, acquisitions or business combinations by the Issuer, and expansion of the Issuer’s sales and marketing efforts to existing and potential customers, and expansion of the Issuer’s product lines, in attractive markets where the Issuer does not currently have extensive operations or sales. However, the Tonghao Group cannot predict whether any of the foregoing activities will ultimately result in plans or proposals that would be presented to the Issuer or its board or shareholders, and they have not entered into any contracts or made any commitments with respect to any of the foregoing matters.  Except as described herein, the Tonghao Group does not have any plans or proposals which relate to, or could result in, any of the actions described in paragraphs (a) through (j) of the instructions to Item 4 of Schedule 13D.

 

 

The Tonghao Group may, at any time and from time to time, review or reconsider its position and/or change its purpose and/or formulate plans, strategies or proposals and take such actions with respect to its investment in the Issuer, including any or all of the actions described in the foregoing paragraphs.

ITEM 5.

Interest in Securities of the Issuer

(a)-(b) Based on the most recent information available, the aggregate number and percentage of the Ordinary Shares (the securities identified pursuant to Item 1 of this Schedule 13D) that are beneficially owned by each of the Tonghao Group members is set forth in boxes (11) and (13) of the cover pages to this Schedule 13D for each of the Tonghao Group members, and such information is incorporated herein by reference. The percentages reported herein are calculated based on the 35,449,485 Ordinary Shares reported outstanding by the Issuer in Item 6 of its Annual Report on Form 20-F filed with the SEC on November 14, 2017.

Tonghao Cayman is the direct beneficial owner of 3,500,000 Ordinary Shares.

Tonghao Shanghai, through its ownership of Tonghao Cayman, may be deemed to share voting and dispositive power over the Ordinary Shares beneficially owned by Tonghao Cayman.

Each of TongDing, Yujing and Xingqiong, through their ownership of Tonghao Shanghai, may be deemed to share voting and dispositive power over the Ordinary Shares beneficially owned by Tonghao Cayman.

Ruicun, through its management of Yujing’s investment in Tonghao Shanghai, may be deemed to share voting and dispositive power over the Ordinary Shares beneficially owned by Tonghao Cayman.  Qiao Zhongxing, through his controlling interest in Xingqiong, may be deemed to share voting and dispositive power over the Ordinary Shares beneficially owned by Tonghao Cayman.

The numbers of Ordinary Shares as to which each of the Tonghao Group members has sole voting power, shared voting power, sole dispositive power and shared dispositive power is set forth in boxes (7), (8), (9) and (10), respectively, on the cover page to this Schedule 13D for each of the Tonghao Group members, and such information is incorporated herein by reference.

(c) Except as described in Item 3 and Item 4, none of the Tonghao Group members have engaged in any transactions in the Ordinary Shares during the sixty days prior to the obligation to file this Schedule 13D. To the knowledge of the Tonghao Group, there have been no transactions by any director or executive officer of any of the Tonghao Group members listed in Schedules I through VI hereto in the Ordinary Shares during the past sixty days.

(d) To the best knowledge of the Tonghao Group, no person is known to have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of Ordinary Shares held by the Tonghao Group other than each of the Tonghao Group members.

(e) Not applicable.

ITEM 6.

Contracts, Arrangements, Understandings or Relationships with respect to Securities of the Issuer

The information set out in Item 3 and Item 4 of this Schedule 13D is hereby incorporated herein by reference.

 

 

On October 24, 2017, TongDing, Yujing and Xingqiong entered into a Shareholders’ Agreement (the “Shareholders’ Agreement”), pursuant to which they have agreed to form and share control over Tonghao Shanghai and Tonghao Cayman, for the purpose of acquiring and holding the Ordinary Shares that are the subject of this Schedule 13D.  Among other things, the Shareholders’ Agreement provides that, with certain exceptions, any decisions relating to the investment in the Ordinary Shares require unanimous consent of all three parties to the agreement.

On November 1, 2017, TongDing, Yujing and Xingqiong entered into a Supplementary Agreement to the Shareholders’ Agreement (the “Supplementary Agreement”), pursuant to which they agreed on the investment objective of becoming the largest shareholder of the Issuer.  The parties to the Supplementary Agreement further agreed that, notwithstanding the provisions of the Shareholders’ Agreement, in the event such investment objective is not achieved by November 1, 2018, or in the event the value of the Ordinary Shares has increased by at least 20% in the period between the execution of the Supplementary Agreement and such date, any party will have the right to cause Tonghao Cayman to dispose of a number of Ordinary Shares held by Tonghao Cayman equal to such party’s proportional interest in Tonghao Shanghai and receive a payment from Tonghao Shanghai equal to the proceeds of such disposition, in exchange for a reduction in such party’s equity interest in Tonghao Shanghai.

The Tonghao Group members entered into a Joint Filing Agreement on December 8, 2017 (the “Joint Filing Agreement”), pursuant to which they have agreed to file this Statement jointly in accordance with the provisions of Rule 13d-1(k)(1) under the Exchange Act. A copy of the Joint Filing Agreement is attached hereto as Exhibit 99.1.  Information with respect to each of the Tonghao Group members is given solely by such Tonghao Group member, and no Tonghao Group member assumes responsibility for the accuracy or completeness of the information concerning the other Tonghao Group members except as otherwise provided in Rule 13d-1(k).

Except as described above or elsewhere in this Statement or incorporated by reference in this Statement, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the members of the Tonghao Group or, to the best of their knowledge, any of the persons named in Schedules I-VI hereto and any other person with respect to any securities of the Issuer, including, but not limited to, transfer or voting of any securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.

The foregoing descriptions of certain material terms of each agreement above are not complete and are qualified in their entirety by reference to the agreements listed in Item 7 and are incorporated by reference in this Item 6.

ITEM 7

Material to be Filed as Exhibits

*Filed herewith.

 

 

	TONGHAO (CAYMAN) LIMITED
	By:	/s/ Jie Deng
	Name:	Jie Deng
	Title:	Director
	TONGHAO INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD.
	By:	/s/ Jie Deng
	Name:	Jie Deng
	Title:	Director
	TONGDING GROUP CO., LTD.
	By:	/s/ Shen Xiaoping
	Name:	Shen Xiaoping
	Title:	Legal Representative
	HANGZHOU XINGQIONG INVESTMENT LLP
	By:	/s/ Chen Xiaoliang
	Name:	Chen Xiaoliang
	Title:	Authorized Representative
	SHANGHAI YUJING INVESTMENT CENTER (LIMITED PARTNERSHIP)
	By:	/s/ Wang Hongyu
	Name:	Wang Hongyu
	Title:	Representative
	RUICUN CAPITAL CO., LTD.
	By:	/s/ Jie Deng
	Name:	Jie Deng
	Title:	Chairman

	QIAO ZHONGXING
	By:	/s/ Qiao Zhongxing
	Name:	Qiao Zhongxing

 

 

Name		Present Principal Occupation or Employment		Citizenship
Ma Min		Director		People’s Republic of China
Jie Deng		Director		United States of America
Shen Xiaoping		Director		People’s Republic of China
Liu Dongyang		Director		People’s Republic of China

 

SCHEDULE II

DIRECTORS AND EXECUTIVE OFFICERS OF

Tonghao Information Technology (Shanghai) Co., Ltd.

The following table sets forth certain information with respect to the directors and executive officers of Tonghao Information Technology (Shanghai) Co., Ltd.  The business address of each director and executive officer of Tonghao Information Technology (Shanghai) Co., Ltd. is Floor 1, Building 1, No. 251, Yaohua Road, Pilot Free Trade Zone, Shanghai, People’s Republic of China.

 

 

 

 

 

 

 

 

SCHEDULE III

DIRECTORS AND EXECUTIVE OFFICERS OF

TongDing Group Co., Ltd.

The following table sets forth certain information with respect to the directors and executive officers of TongDing Group Co., Ltd.  The business address of each director and executive officer of TongDing Group Co., Ltd. is No.8 Xiaoping Road, Badu Economic Development Zone, Wujiang District, Suzhou City, Jiangsu Province, People’s Republic of China.

 

 

 

 

 

 

 

 

SCHEDULE IV

DIRECTORS AND EXECUTIVE OFFICERS OF

Hangzhou Xingqiong Investment LLP

 

 

 

 

 

 

 

 

 

SCHEDULE V

DIRECTORS AND EXECUTIVE OFFICERS OF

Shanghai Yujing Investment Center (Limited Partnership)

 

The following table sets forth certain information with respect to the directors and executive officers of Shanghai Yujing Investment Center (Limited Partnership).  The business address of each director and executive officer of Shanghai Yujing Investment Center (Limited Partnership) is Room 613, Floor 6, Building 1, No.185, Aona Road, Pilot Free Trade Zone, Shanghai, People’s Republic of China.

 

 

 

 

 

 

 

 

SCHEDULE VI

DIRECTORS AND EXECUTIVE OFFICERS OF

Ruicun Capital Co., Ltd.

 

The following table sets forth certain information with respect to the directors and executive officers of Ruicun Capital Co., Ltd.  The business address of each director and executive officer of Ruicun Capital Co., Ltd. is Room 613, Floor 6, Building 1, No.185, Aona Road, Pilot Free Trade Zone, Shanghai, People’s Republic of China.