Shanghai Pudong Science and Technology Investment Co., Ltd. Responds to May 8 Announcement by RDA Microelectronics, Inc. Regarding Pending Merger Transaction with Tsinghua Unigroup Ltd.

SHANGHAI, May 12, 2014 /PRNewswire/ -- Shanghai Pudong Science and Technology Investment Co., Ltd. ("PDSTI") responded today to a press release issued by RDA Microelectronics, Inc. ("RDA") on May 8, 2014 to clarify certain misimpressions the May 8 press release by RDA has created and PDSTI's positions on various matters.

1. PDSTI has sufficient financial strength and funding capabilities. In connection with PDSTI's proposed acquisition of RDA, the headquarters of the Bank of China approved a facility guarantee of up to RMB3.9 billion (or equivalent foreign exchange). PDSTI also possesses abundant funds itself and has sufficient capital to acquire a company of comparable size to RDA. RDA has repeatedly, in its press releases, cast doubt on PDSTI's funding capabilities and even PDSTI's investment capabilities. The purpose of making these allegations is apparent. As a reputable institutional investor, PDSTI will not respond to this kind of provocation.  
2. PDSTI fully understands RDA's complex state of mind facing the current quagmire. PDSTI believes that RDA's difficult situation is the result of ignoring PDSTI's well-intentioned advice between November 8 to November 11, 2013 and its entering into a binding agreement with a domestic buyer who did not obtain the "Letter of Confirmation to the Information Report of Outbound Acquisition or Bidding Project" prior to signing. According to the letter issued by the National Development and Reform Commission on November 22, 2013 concerning the acquisition, a domestic buyer that is entering into a merger agreement with RDA without obtaining the "Letter of Confirmation to the Information Report of Outbound Acquisition or Bidding Project" clearly violates the Interim Measures for the Administration of Examination and Approval of the Overseas Investment Projects [NDRC 2004 No. 21] and the Circular on Several Issues about Improving the Administration of Overseas Investment Projects [NDRC Foreign Investment 2009 NO. 1479].
3. We note that during the past six months after the signing of the merger agreement, RDA and its domestic buyer have disregarded our good faith reconciliation efforts through various channels. We understand that RDA and its domestic buyer feel hopeful due to the reform in the investment approval regime by the PRC government. However, the National Development and Reform Commission issued the Measures for the Administration of Examination and Approval of Overseas Investment Projects [NDRC 2014 No. 9] ("Circular 9") on April 8, 2014. Pursuant to Circular 9, the domestic buyer in an outbound acquisition deal still needs to obtain the "Letter of Confirmation to the Information Report of Outbound Acquisition or Bidding Project" prior to entering into a merger agreement. Therefore, the domestic buyer entering into a merger agreement with RDA prior to obtaining the "Letter of Confirmation to the Information Report of Outbound Acquisition or Bidding Project" still does not comply with the relevant rules and regulations. The merger agreement between RDA and such a domestic buyer is potentially based on a wrongful action and therefore such an ill-founded transaction may not be completed.
4. As a potential buyer, if the opportunity exists, PDSTI still has some interest in acquiring RDA. However, in compliance with the spirit of Circular 9, PDSTI will not pay beyond the reasonable value of RDA. PDSTI has started due diligence on certain other IC design companies and has identified many other potential acquisition targets in the market.
5. Whether or not PDSTI will pursue an acquisition of RDA does not change the fact that the parties to the merger agreement may have violated the relevant rules and regulations. However, as one of the interested parties, in order to protect the interest of the shareholders of RDA, PDSTI is willing to help resolve the problem faced by the parties in the merger agreement by providing an alternative option to the pending transaction. The option to be offered by PDSTI has sufficient flexibility and can substantially preserve the interest of minority shareholders of RDA. It will not expose RDA to additional legal liability either. We propose that each party in the merger agreement commence negotiations with PDSTI as soon as possible and consent to three-way discussions, so there will be no claim of any liability or breach under the existing merger agreement as a result of engaging in discussions and negotiations with us. PDSTI also suggests that minority shareholders urge the two parties to the merger agreement to sit down at the negotiation table, so that the current quagmire could be solved as soon as possible.

About PDSTI

PDSTI, a wholly state-owned limited liability company directly under Pudong New Area government of Shanghai, combines proprietary investments with investment management services. The business of PDSTI currently covers a broad range of areas, including venture capital and private equity investments, mergers and acquisitions, management of fund of funds and private equity funds, and debt investments. PDSTI has deep industry knowledge of integrated circuit design and has invested in several well-known IC design companies. For additional information, please see the website at http://www.pdsti.com.

SOURCE Shanghai Pudong Science and Technology Investment Co., Ltd.

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