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. However, New World Development will not receive cash from ALT; instead it will be issued 4.17 billion new shares valued at 1.2 cents each. It will also issue $1.2 billion in three-year subscription notes. The deal will bring New Development's interest in ALT up to 55.27 per cent. New World Development is in effect paying $50 million in cash for ALT to take over its stake in the mobile business. This enables the property developer to transfer the mobile unit's heavy debts to a separate listing entity. As of March 31 this year, the mobile unit had aggregate liabilities of $2.23 billion, of which $440 million are bank loans and $1.79 billion are New World Development's shareholder loans. The mobile unit had an audited consolidated net deficit of $1.26 billion as of June 30 last year. Based on the acquisition price, ALT is paying $1.25 billion to buy assets that carry $1.26 billion in deficit, meaning ALT is paying a premium of $2.51 billion for the assets. Having lost $153.42 million on turnover of only $8.03 million and sitting on $25.87 million cash at the end of last year, ALT has little choice but to accept the highly geared back-door listing bid. 'The ALT board is optimistic about the prospects of the mobile telecommunications market and considers the transactions will provide a solid group for ALT to invest in mobile telecommunications projects. The ALT board also believes that the transactions will enlarge ALT's business scope and broaden its revenue stream,' the firm told shareholders in a letter. However, the mobile business in Hong Kong is widely acknowledged as overcrowded, putting huge pressure on carriers' profitability.