New World Development's back-door listing of its mobile-phone assets is scheduled to be completed on Friday
Minority shareholders of Asia Logistics Technologies (ALT) have until Friday to approve a back-door listing by New World Development that will put the company into negative equity with almost $2.5 billion in debt.
New World Development struck a deal in late March to sell its New World Mobility mobile-phone business to 35.71 per cent subsidiary ALT. The mobile-phone arm is facing intense competition in a highly saturated market.
Under the asset injection plan, ALT will pay $1.25 million to New World Development for the mobile assets and assume $1.25 billion of debts.
According to ALT's independent financial advisers, the proposed plan, if completed, will bring the logistics management services and software provider's debt up from $29.1 million to $2.47 billion.
The heavily leveraged back-door listing plan will turn ALT from a company with net tangible assets of $32.6 million into one with net tangible liabilities of $1.08 billion.
This is similar to PCCW's takeover of Cable & Wireless HKT in 2000. PCCW reported a negative net worth of US$1.8 billion for the year after it wrote off massive goodwill that included US$22 billion for the takeover of Cable & Wireless HKT, against reserves.
