New Tel plans mainland buy
A telecommunications company based in Perth, Australia, with ties to the investment arm of Xinhua News Agency is to pay A$400 million (about HK$1.97 billion) to buy a mainland Internet service provider and Web portal.
New Tel said that under an agreement with Xinhua Holdings, the mainland company is to form an organisation called Newco that will become the owner of a number of Internet companies in the mainland.
New Tel, which is owned 5 per cent by Xinhua, is to raise the $400 million via an issue of 200 million New Tel shares at $2 each.
The level of holding in Newco was not disclosed.
New Tel said it had given Xinhua a $1 million deposit, funded by the issue of a $2.7 million convertible note, and planned to raise $20 million through a 16.6 million rights issue at $1.20 per share.
'After formal due diligence is completed and with the approval of shareholders, New Tel will then seek to raise a further $200 million on the Nasdaq stock market in the [United States] to fund the development of the business,' said Peter Malone, New Tel chief executive.
New Tel is listed on the Australia and Nasdaq stock exchanges.
The company did not propose a schedule for the plans, but it appears unlikely that New Tel would be permitted to be the sole owner of Newco.
A Sino-US World Trade Organisation agreement reached last week allowed for only 49 per cent foreign ownership of mainland telecommunications and Internet companies on Beijing's entry into the trade body, rising to 50 per cent after two years.
New Tel said it would work with Xinhua and other state-owned organisations to boost Internet usage in the mainland.
It said their strategic alliance partners included the China Economic Information Centre, a branch of the Ministry of Foreign Trade and Economic Co-operation, and Beijing Goldway Network Technology - the Ministry of Information Industry's electronic information centre.
New Tel said it expected Newco's revenue would come from business and consumer-oriented services, including electronic commerce, Internet access and Web site hosting.
In July, New Tel launched a long distance calling service from Australia to the mainland in partnership with Xinhua News Telecommunications Hong Kong.
The two companies have a joint-venture company named NewStar that sends Australia-originated calls to Beijing via New Tel's satellite system.
INTERNET
