MUMBAI: Tiger Media, one of China's leading nationwide multi-platform media companies, has divested its stake in its subsidiary SearchMedia International Limited (SMIL).

As part of the transaction, SMIL will be divested to Partner Venture Holdings Limited, an independent third party private limited company, in exchange for 650,000 options of Tiger Media at $1.25 per share.

Included in the divestiture of SMIL are the subsidiaries, Ad Icon Hong Kong Limited, Beijing Wanshuizhiyuan Advertising Co., Ltd. and Shanghai Botang Advertising Co., Ltd subsidiaries.

As part of the transaction, Partner Venture will pursue the collection of all receivables and all claims for SMIL, for the benefit of Tiger Media and share 50 per cent of any receivables, net proceeds, awards or judgments from any claims or lawsuits brought about by SMIL entities; provided, however, 100 per cent of any sale proceeds from the sale or transfer of any of the SMIL subsidiaries will accrue to Tiger Media.

As of 31 December, SMIL's operating results will no longer form part of the Company's consolidated financial statements. The Company believes that the cost savings from eliminating out the remaining earn out obligations and potential tax liabilities pursuant to the acquisition agreement within the subsidiaries of SMIL frees up the Company's resources for use in other more promising opportunities.

The transaction also materially improves the balance sheet and capitalization of Tiger Media including eliminating $13.7 million of goodwill, $21.3 million of accounts payable, $5.4 million in remaining acquisition consideration payable and $11.6 million of income tax payable.

Tiger Media CEO Peter W H Tan remarked, "It is never an easy decision to dispose of operating subsidiaries that has been with Tiger Media from the outset, but we feel in order to expand shareholder value in the longer term and allow the Company to focus on and pursue additional accretive concessions, it is in the best interests of the Company to divest SMIL.

It is, of course, beneficial as a whole to be able to eliminate from our balance sheet outstanding payables, earnout liabilities and tax provisions in the aggregate amount of $38.3 million. We intend to continue to focus on more profitable concessions such as our announced major concessions with Home Inns & Hotel Management Inc. and our Luxury Mall LCD Joint Venture and expect to continue to add new concessions with prominent partners that will accelerate our growth and create value for our shareholders."