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Eric Ng

Hwa Kay Thai Holdings is to acquire Internet and telecommunications group DigiNet for $300 million.

 The sportswear distributor will pay for the entire share capital of DigiNet with $150 million cash and an issue of 250 million new shares at 60 cents each.

 That represents a discount of 27.7 per cent to Hwa Kay Thai's closing price yesterday of 83 cents.

 The company would fund the cash payment from internal resources, chairman Patrick Wong King-chi said, adding it had about $800 million cash on hand after completing a recent rights issue and share placement.

 DigiNet integrates information-technology systems, operates Internet data-hosting centres and helps build telecommunications infrastructure.

 The party selling the DigiNet stake, Netpolis Communications, will guarantee to Hwa Kay Thai that DigiNet's net profit will not be lower than $20 million for this year.

 DigiNet chief executive Bede Lau, who was operations director of CCT Telecom's subsidiary CCT Communications until last September, said DigiNet recorded 'a slight loss' on last year's turnover of about $20 million.

  'The company was still in its investment period since it was set up about two years ago, but we are confident it will make a profit this year as we are in final stages of negotiations on a number of contracts,' Mr Lau said, without revealing the value or content.

 DigiNet plans to open a 10,000 square foot data centre in Hong Kong by April.

  It would open a similar one in Beijing later, Mr Lau said.



Hwa Kay Thai spots Internet chance in purchase of DigiNet