On December 8, Acorn's board approved a new share buyback plan of the company's ADSs for a period of one year, replacing the terms of the plan approved in February 2017. Under the new buyback plan, Acorn is authorized to repurchase up to $2M of its ADSs within a one-year period from December 7, 2017 to December 7, 2018.
Acorn International announced that the company recently reached an agreement to sell a majority stake in its HJX business to a third-party investor and operator. Specifically, the agreement includes the establishment of a joint venture that will be controlled and operated by such third party. Acorn's HJX business engages in direct sales of Ozing branded electronic learning devices incorporating mobile internet interactive features, such as online tutoring services. The partial divestiture of this business unit represents an exit of day-to-day management by Acorn from this business, allowing Acorn to focus on its already profitable businesses and brands, as well as on achieving profitable growth of new businesses within the Group. Under the terms of the agreement, the joint venture will help liquidate a large stock of HJX inventory, transition certain expenses on a pro rata basis to the joint venture and allow Acorn to divest day-to-day operational management to the third-party team. The joint venture is expected to be operational in the coming months.
Acorn International announced that it entered into a settlement agreement on July 28, 2017 relating to, among other things, a claim filed on December 1, 2016 in the Grand Court of the Cayman Islands against Andrew Y. Yan, Gordon Xiaogang Wang, and Jing Wang, each former directors of the company over alleged breaches of fiduciary duties, misconduct and/or mismanagement. Acorn's action against the Former Directors arose out of the previously disclosed dispute between two groups of the Company's shareholders. Among other things, that dispute involved the improper removal of Mr. Robert W. Roche from his role as Executive Chairman of Acorn by certain members of its then-board of directors. In connection with various actions relating to the shareholder dispute, in March 2016 the Cayman Court found in favor of Roche Enterprises Ltd, a company wholly owned by Mr. Roche. The claim subsequently filed in the Cayman Court by Acorn in December 2016 alleged that in removing Mr Roche as Executive Chairman, and in subsequent conduct on behalf of Acorn, the Former Directors had breached their fiduciary duties to Acorn and were responsible for misconduct in and/or mismanagement of Acorn's business, and were liable to Acorn for the loss and damage caused to it as a consequence of such conduct. Pursuant to the Settlement Agreement, the company, REL, the Former Directors and SB Asia Investment Fund II L.P., an exempted limited partnership registered in the Cayman Islands will, among other things, discontinue and/or withdraw all claims, counterclaims and taxation proceedings in the Cayman Court related to the above mentioned matters. Agreement was also reached for the Company to repurchase all of the ordinary shares of the company owned by SAIF, representing 27.7% of the total outstanding ordinary shares of the company, for the purchase price of approximately $4.17 million, the equivalent of $4.05 per ADS. The purchase price represents an approximately 60.5%, 64.8% and 62.8% discount to the closing price of the company's ADSs based on the 30-day, 60-day and 90-day moving average, respectively. The repurchased shares will be cancelled. After giving effect to the company's repurchase of the shares held by SAIF, the company will have 53,626,050 ordinary shares outstanding or the equivalent of 2,681,302 ADSs.