New Tel <NWL.AX> says China deal has govt partner|
SYDNEY, Jan 18 (Reuters) - Emerging telecom company new Tel Ltd said on Tuesday
that its planned China Internet operation included the official Xinhua news agency,
disputing reports that the links were tenuous.
"The company would first like to confirm the direct relationship between Xinhua
Holdings Company and Xinhua News Agency, clarifying any misunderstanding in the
market," New Tel said in a statement issued by the Australian Stock Exchange after the
market had closed on Tuesday. It did not elaborate on the relationship.
New Tel was one of the hottest stocks on Nasdaq earlier this year when its China deal
caught the attention of U.S. investors who were attracted by the Xinhua link and
speculation that New Tel could become China's version of America Online.
Australian Associated Press reported on Tuesday that Hong Kong-based Golden Tripod
Technology Ltd (GTT), a wholly owned subsidiary of Xinhua News Agency, had said
Xinhua Holdings was in no way linked with Xinhua News Agency.
AAP quoted GTT as saying in a statement issued on January 11; "It must be clarified
that this partnership (between New Tel and Xinhua Holdings), as well as Xinhua
Holdings Group Ltd, is not associated with Xinhua News Agency in any way."
New Tel shares ended at A$2.95 on Tuesday, down from the January high of A$4.00.
On Nasdaq, the company's American Depositary Receipts last traded at US$19, down
from a US$31.50 peak on January 5.
The following statement was issued by New Tel through the Australian Stock
Further to advice to ASX on 23 November 1999 and 31 December 1999, the company
provides an update on the progress of it's development of China's leading Internet
Service Provider (ISP) and Portal.
The company would first like to confirm the direct relationship between Xinhua Holdings
Company and Xinhua News Agency, clarifying any misunderstanding in the market. As
contemplated in New Tel's agreement signed with Xinhua on 23 November 1999, a
Project Team has been formed for the purpose of implementing the proposed Internet
transaction and associated capital raising. The Project Team consists of New Tel and
Xinhua executives, and experts from US and UK lawyers Brown & Wood, Freehill
Hollingdale & Page, and Deloitte Touche Tohmatsu (E-commerce group). This group
has been mandated to manage all aspects of the transaction including financing, due
diligence and the e-commerce strategy development and roll-out.
The Project Team has completed a detailed assessment of Internet products and
services. Elements of the products and services assessed include an identification of
products and services offered, customer segments and profiles, and performance reports
such as page impressions and hit rates where available to assess the current levels of
activity of these products and services.
The Project Team, operating from the Company's Shenzhen office, has identified all
information requirements concerning the Internet related assets being acquired. Xinhua
is now finalising the information which will be utilised to complete the c-commerce
strategy prior to the main capital raising and roll-out of the programme, including:
* Identification and analysis of target markets and customer segments for New Tel;
* Definition of the organisational linkages and boundaries with New Tel Limited and
* Human resources requirements;
* Technology environment design;
* Financial planning and cashflow requirements; and
* Operations environment implementation.
Further to an announcement to ASX on 20 November 1999, New Tel has raised
A$17.2m to fund the initial stage of the Internet Project. New Tel shareholders are also
being offered the opportunity to participate in a non-renounceable rights issue of $4.8m
through a short form prospectus to be issued this month. It is planned that shareholders
will be offered one ordinary share for every 25 ordinary fully paid shares held at an
issue price of $1.20 per new share.
The Company will then proceed to the second major stage which involves a capital
raising of A$200m to finance the rollout of the Internet programme.
As part of this programme, with the capital of the Company to increase substantially
further to the completion of the acquisition of the Internet asses and the capital raising of
A$200 million, the Company proposes to issue options to the CEO Mr Peter Malone.
This issue, equating to up to 20 per tent of the issued capital of the Company, is provided
for his efforts in securing and delivering the project to the Company and his ongoing
commitment under his employment contract. The exercise of these options will be based
upon the achievement of key performance milestones. Additional to the completion of
the A$200m capital raising and the acquisition of the Chinese Internet assets, these
milestones include the achievement of set revenue targets or minimum share market
capitalisation targets. Based on the prevailing market capitalisation and share price, it is
envisaged that these options will be issued at A$4.00 with vesting to be benchmarked
between A$4.00 and A$6.00.
In summary New Tel is pleased to report the progress of its Internet Project. Xinhua
has advised New Tel that it is satisfied with the progress, and with the solid relationship
developed with New Tel on the Internet project and over the past three years in winning
an Australian telecommunications carrier licence and commencing carrier operations.
Shareholders will be provided with an Information Memorandum covering the ISP and
Portal business and the issue of options presently.